Target Overview

Prosperus Growth, a Croatian private equity fund, has secured a controlling interest in Neos, a Zagreb-based provider of advanced IT solutions. Neos specializes in a range of services including data analytics, rapid application development, cloud integration, and IT infrastructure. Serving diverse sectors such as financial services, telecommunications, and the public sector, Neos demonstrated strong financial performance in 2020, achieving HRK 63.1 million in revenue and HRK 14.5 million in EBITDA, which translates to an impressive EBITDA margin exceeding 22%.

Industry Overview in Croatia

The Croatian IT industry has seen considerable growth over recent years, spurred by an increasing demand for digital transformation across various sectors. Many businesses are investing in cloud solutions and data analytics to enhance efficiency and drive innovation. This shift has been further accelerated by the growing emphasis on remote work and digital services, particularly due to the global pandemic.

Croatia's strategic location within Southeast Europe positions it as an emerging hub for IT services. With a skilled workforce and several government-backed initiatives promoting IT development, the country is becoming increasingly attractive for both local and international investors. The local market is characterized by a vibrant startup ecosystem, which encourages innovation and the adoption of new technologies.

Despite these positive trends, the Croatian IT landscape also faces challenges, such as a talent shortage and competition from larger markets. Companies are continually seeking strategic partnerships to strengthen their market position and expand their service offerings. Neos stands out as a well-positioned player that is eager to capitalize on these industry dynamics.

Rationale Behind the Deal

The investment in Neos aligns with Prosperus Growth's strategic focus on high-potential IT firms, particularly within cloud management and business analytics. This acquisition represents the second investment under the Prosperus Technology Group, a platform aimed at enhancing the growth of IT companies. By partnering with Neos, Prosperus aims to leverage their combined strengths to drive revenue growth and maintain healthy EBITDA margins in the future.

Investor Information

Prosperus Growth is dedicated to fostering high-growth companies within the Croatian market. The fund recently raised €50.9 million via a private offering, securing notable contributions from the European Investment Fund (EIF) and the Croatian Bank for Reconstruction and Development (HBOR) under the CROGIP program. A significant portion of the fund—at least 75%—is reserved for investment in Croatian companies, with remaining allocations targeting opportunities in the broader region. The fund specifically focuses on transactions ranging from €5 million to €10 million, primarily in growth-oriented sectors.

View of Dealert

The acquisition of Neos by Prosperus Growth is viewed positively as it aligns with current industry trends and Neos's strong operational performance. Given the growing demand for IT solutions, particularly in the areas of cloud integration and data analytics, this partnership could result in substantial business development opportunities. Additionally, the expertise that Prosperus Growth brings could enhance Neos's strategic direction and operational execution.

Moreover, the strong backing from reputable investors such as the EIF and HBOR enhances the credibility of this investment, indicating a robust confidence in the potential for growth within the IT sector in Croatia. The combined knowledge and resources of both entities could lead to innovative solutions and expanded market reach.

Overall, this investment appears to be a strategic move that could catalyze Neos's growth trajectory while solidifying Prosperus Growth's portfolio in the burgeoning IT landscape of Croatia. It demonstrates a forward-thinking approach that aligns with market demands and investor expectations.

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