1. FORMS OF INVESTMENTS INTO EQUITY AND QUASI-EQUITY
By adopting the Policy for Investments into Equity and Quasi-Equity, HBOR has determined a framework for dealing with investments into equity and quasi-equity. HBOR can make investments into equity and quasi-equity in its own name and for its own account or based on an agreement with the fiduciary (principal). In accordance with the decision of the Government of the Republic of Croatia and/or HBOR’s decision-making bodies, HBOR invests in equity and quasi-equity through the following forms:
Direct investments – HBOR’s direct investments in equity and quasi-equity of companies established in the Republic of Croatia or abroad, as well as in equity and quasi-equity of international organisations. With such investments, HBOR becomes a direct (co-)owner of the company or international organisation concerned and acquires the rights and obligations arising from such (co-)ownership. Direct investments can be made in the following ways:
- By purchasing of equity securities (shares and other equity instruments) or equity stakes in companies and international companies,
- By converting receivables based on loans approved by HBOR or receivables of the fiduciary (principal) in shares or equity stakes,
- By taking over investments made by the alternative investment funds or co-investment vehicles in kind (in specie).
Indirect investments – HBOR’s investments into alternative investment funds or special purpose vehicles through which investments and co-investments into equity and quasi-equity are made.
All investments are made in accordance with the criteria of the applicable state aid regulations:
- With simultaneous investments of private investors, by applying the market economy operator test as defined in the Commission Notice on the notion of state aid as referred in the Article 107 (1) of the Treaty on the Functioning of the European Union or
- By applying the criteria from Commission Regulation (EU) no. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (L 187/1) and the regulation that amends it, Commission Regulation (EU) no. 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid, with all subsequent amendments.
BASIC CONDITIONS OF INVESTMENTS IN EQUITY AND QUASI-EQUITY
HBOR is obliged to consider a received investment opportunity if at the time of receiving the investment opportunity there is an investment programme in force in HBOR, the prescribed conditions of which are met by the received investment opportunity or if a decision of the Government of the Republic of Croatia is in force, by which HBOR is authorised to make a certain investment.
In other cases, HBOR will consider an investment opportunity only if the conditions of such investment opportunity are in line with HBOR’s strategic objectives set out in HBOR’s Business Strategy.
In case of Indirect investments, HBOR is obliged to consider the received investment opportunity only if, in addition to the above mentioned, it also meets the following conditions:
- It enables financial leverage
Financial leverage on HBOR’s invested funds is achieved through investments of other investors (public and/or private). HBOR’s commitment will not exceed 50% of the total size of each fund. Exceptionally, due to the difficulties in raising capital from other investors in the Croatian market, when establishing a fund that will invest in new technologies or companies in the earliest stages of their development and funds that will contribute to achieving HBOR’s strategic objectives set out in HBOR’s Business Strategy, HBOR may participate as a majority investor.
- Meets the principles of good market practice and commercial objectives
Although HBOR acts as a development institution and compensates for the lack of supply for equity and quasi-equity, HBOR’s investments are made with the aim of achieving a return on investment and yield. - It envisages investing in companies in the Republic of Croatia
The investment strategy of financial intermediary envisages investments in eligible final beneficiaries consisting of companies established in the Republic of Croatia and performing the majority of their business activities in the Republic of Croatia, regardless of their size determined in accordance with applicable regulations. The financial intermediary is obliged to ensure that at least an amount equal to the amount representing HBOR’s commitment is invested in eligible final beneficiaries. Exceptionally, if HBOR invests in the name and for the account of the fiduciary (principal) or for the account of the fiduciary (principal) and in its own name, HBOR may invest without the financial intermediary committing to invest in eligible final beneficiaries in the Republic of Croatia at least the amount equal to HBOR’s commitment, all provided that HBOR has received an order (instruction) from the fiduciary (principal) to do so.
- It offers the same conditions for all investors
HBOR’s investments are carried out under the criterion that equal conditions are offered to all investors (the so-called Pari-Passu principle), i.e. that HBOR is not in a disadvantaged or more favourable position compared to other investors (e.g. in terms of yield distribution, etc.). - It envisages investments in activities eligible for financing by HBOR
HBOR does not finance economic activities the financing of which is not in line with HBOR’s mission. Such activities are listed in the General Eligibility Criteria, item 3.1. Activities and purposes not eligible for funding. Exceptionally, if HBOR invests in the name and for the account of the fiduciary (principal) or for the account of the fiduciary (principal) and in its own name, HBOR may invest without the financial intermediary committing itself to invest exclusively in activities acceptable to HBOR, all provided that HBOR has received an order (instruction) from the fiduciary (principal) to do so. - It envisages the participation of the management company in the investment
HBOR will invest in alternative investment funds in which, as investors, the fund management company of their advisors invest in accordance with good market practice. HBOR will seek that financial intermediaries, companies and international organisations in which it holds shares or ownership stakes, operate in accordance with relevant positive regulations and good market practice, in particular with regard to:
- Preventing money laundering and terrorism financing and tax evasion
HBOR will require that financial intermediaries, companies and international organisations in which it holds shares or ownership stakes, operate in accordance with applicable national, EU and internationally recognised and adopted standards for the prevention of money laundering, terrorist financing and tax evasion. HBOR will seek to ensure that investments are valued according to the criteria of responsible investing related to environmental, social and governance factors (ESG). Through its Direct investments and Indirect investments, HBOR supports gender equality among investment partners, employees and in the management structure, both of financial intermediaries and final beneficiaries, as well as in the companies and international organisations in which it holds shares or ownership stakes. - Neutral effect for the environment
HBOR’s investments do not have a direct or an indirect impact on the environment and are considered in line with the Do No Significant Harm principle. Increased economic activity of final beneficiaries, as investment effect, may cause indirect effects to the environment. Therefore, HBOR will, whenever possible, require from financial intermediaries that the projects of final beneficiaries are in line with environmental regulations and with the Do No Significant Harm principle. HBOR will also, whenever possible, require from companies and international organisations in which it has shares or ownership stakes to comply with environmental regulations and with the Do No Significant Harm principle. 3. HBOR’S PROCEDURE WITH INVESTMENT OPPORTUNITIES RECEIVED
HBOR may receive equity and quasi-equity investment opportunities via e-mail
equity@hbor.hr or at the official address of HBOR published on the website. HBOR will respond to the received investment opportunities within 30 days from the day of receiving the documentation or within the deadline and in the manner specified in the relevant investment programme.
