Communications Campaign for OIL Giant

How does Croatia’s oil giant INA manage its communications campaign in the country’s first major IPO.

INA Article

INA Article

INA‘s Profile

INA sees itself as “vertically integrated oil and gas company operating in oil and gas exploration and production, refining and marketing of oil products”. It is also the sole operator of the only two Croatian refineries. With net profits of 883mHRK in 2006 it is the largest company in Croatia. It sees itself as a major player in South-East Europe especially following a strategic partnership signed in July 2003 with Hungary’s MOL. Financially, it meant that MOL acquired 25% plus one share of INA.

This partnership with MOL lead to several outcomes. For instance, according to INA‘s latest annual report it is considering a new natural gas import route through Hungary. Also since 2005 INA and MOL introduced the mutual acceptance of each others branded fuel cards at INA‘s and MOL’s petrol stations. On March 22 nd 2005 INA Supervisory Board approved a complex refinery modernization project, worth around 4.5 billion HRK.

INA‘s IPO, Transaction overview

The first phase of the IPO began in April 2005 when five consortia competed for the tender of “Government consultant”. These were:

Deutsche Bank – Morgan Stanley – PBZ
HSBC – Zagrebačka banka (Unicredito) – Interkapital – Caper
UBSErste Bank –– HPB
Citibank – CAIB (HVB Group)
Merrill Lynch – Raiffeisen CentrobankRBA

By July 2005 three of these five were shortlisted:

HSBC – Zagrebačka banka (Unicredito) – Interkapital – Caper
Citibank – CAIB (HVB Group)
Merrill Lynch – Raiffeisen CentrobankRBA

The winner, (Merrill Lynch – Raiffeisen CentrobankRBA) was announced the following month.

This was a landmark transaction on domestic capital markets. It was the largest ever IPO in Croatia with a high level of retail participation. It was seven times oversubscribed by the public and 22 times oversubscribed by institutional investors. Total domestic demand reachedHRK 5.3 billion with domestic domestic institutional investors accounting for HRK 3.6 billion.

The public was offered 1.7 million ordinary shares or 16.19632% of total shares at HRK 1,690 per ordinary share. Shares were introduced both in Zagreb and London.

Croatian citizens had preferential terms for up to HRK 38,000. This meant that for every ten share held for 364 days they would receive one additional bonus share. They could buy more, but the preferential terms ended at that level.

Logistical support

At Raiffeisen Croatia, sole Croatian bank involved in the IPO, several adjustments needed to be made. First, working hours were extended in branch offices and vacations were revoked during the period preceding theIPO. A new product, a purpose loan to buy INA shares, was developed in 21 days. A communications campaign was developed. In terms of training, not only Raiffeisen’s sales force needed to be trained but also FINA’s, a financial mediator. In one day 10 000 brochures were distributed to around 170 locations in Croatia. Meanwhile software needed to be tested and ready to perform.

Communications campaign

The communications campaign was aimed at various stakeholders: public, government and the financial community.

For the public, the campaign had two aspects to it: brand-positioning and information on what was about to take place.

“I”, “n” and “a” are three letters that are found in that order with relative frequency in Croatian language. The advertisement for brand-positioning took advantage of this to underline the slogan “life in the move – INA” (Zivot u pokretuINA). Billboard ads showing a sail boat, a hot air balloon and a motorbike were tagged respectively with the words ” brzINA” (speed), “pustolovINA” (adventure) and “vještina” (skill). All bear positive connotations.

To inform and educate the public the following advert was conceived. The clip shows a cross-section of Croatia’s society featuring people covering all classes, genders and ages commenting on theIPO.

Read the full article on pages 30 to 32 of “Perspectives”.

Editorial - Perspectives Magazine

Editorial - Perspectives Magazine

Bojana Stefanovic.

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