GRK - Versatile Infrastructure Builder

Stocks
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GRK Infra Oyj plans an initial public offering and sale, and to list its shares on the Nasdaq Helsinki stock exchange list. GRK is a Finnish infrastructure construction group operating in Finland, Sweden, and Estonia. GRK’s core expertise lies in the execution of diverse infrastructure construction projects, project management for large and small projects, and extensive railway expertise.

Listing announcement

The stock listing has been awaited for several years; here are the latest articles:

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Services:

GRK’s core expertise includes the execution of diverse infrastructure construction projects, project management for large
projects, and extensive railway expertise.

GRK offers services from design to construction and maintenance. Our clients include
state administration, municipalities and cities, and the private sector. GRK operates in several projects
in cooperation with other companies in the infrastructure sector.

The service selection is at least comprehensive
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Company Structure

The GRK Group consists of the parent company GRK Infra Oyj and three country companies in Finland, Sweden, and Estonia.

GRK Infra Oyj acts as the parent company of the group, employing the group’s administration. Business operations are carried out by the country companies.

In Finland, GRK Suomi Oy is responsible for business operations, whose services include civil engineering and road construction, paving, rail business, and environmental business.

  • Parent company GRK Infra Oyj, which owns the country companies
  • The country company operating in Finland is GRK Suomi Oy
  • The country company operating in Sweden is GRK Sverige AB
  • The country company operating in Estonia is GRK Eesti AS

2024 figures from the earnings release

Revenue grew significantly, operating profit almost doubled

January-December 2024 in brief (IFRS):

  • Revenue grew by approximately 33 percent to EUR 728.6 (546.2) million.
  • Adjusted EBITDA was EUR 61.3 (38.0) million, or 8.4 (7.0) percent of revenue.
  • EBITDA was EUR 60.9 (37.7) million, or 8.4 (6.9) percent of revenue.
  • Adjusted operating profit was EUR 45.6 (24.9) million, or 6.3 (4.6) percent of revenue.
  • Operating profit was EUR 45.2 (24.2) million, or 6.2 (4.4) percent of revenue.
  • Equity ratio was 42.9 (39.9) percent.
  • Return on capital employed was 150.1 % (47.8 %) percent.
  • Order book grew to EUR 845.6 (568.3) million at year-end.
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Here is an interview with CEO Juha Toimela regarding the listing.

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GRK Company Presentation Event March 11th

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Behind a paywall, a few excerpts below

Growth was quite significant last year, the goal is to stay at the same level for the next few years. So, no growth is expected.

GRK aims for a turnover of 650–730 million euros and an adjusted operating profit of 36–45 million euros this year. In the long term, the targets remain very moderate after the growth spurt of recent years: a turnover of over 750 million euros and an operating profit margin of over six percent by the end of 2028. In practice, the company aims to maintain its current state.

Unlike self-developed residential construction, bridges, routes, or railway sections are not built on the company’s own balance sheet but directly for the customer. With a light balance sheet, an improvement in profitability, which GRK also aims for, is more readily reflected in a strengthening of return on capital.

Kreate is a good comparison

Despite its larger size, or perhaps because of it, GRK has achieved stronger growth than Kreate. Turnover growth has averaged almost 20 percent in 2019–2024, compared to the market’s less than six percent and Kreate’s average of about 10 percent growth. The operating profit margin has been 4.6 percent. GRK also achieved growth last year, even though Kreate’s growth stumbled.

And another from behind the paywall

IPO funds going towards acquisitions in Sweden

“We are also looking for a growth enabler, meaning momentum for our acquisitions, especially in Sweden,” Toimela says.
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What kind of growth is GRK practically interested in, possibly buying infrastructure builders in Sweden?

“In Sweden, that’s exactly it. Then we are looking for growth opportunities in new sectors within the infrastructure industry. Possibly some specialized expertise in Finland and Estonia,” Toimela explains.

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Good start. Nice that GRK is finally coming to the stock exchange, it has indeed been awaited, as you said. The CEO (retiring soon) said in Verneri’s interview that GRK is now in strong shape and the key figures are in order. Undeniably, the figures look good from recent years.

GRK
million euros | 2024 | 2023
Revenue | 728.60 | 546.20
EBITDA % | 8.40% | 6.9%
Operating profit % | 6.20% | 4.43%
Equity ratio | 42.90% | 39.9%
Order book | 845.60 | 565.3
Average ROE for the last six years: 23.60%

Practically all figures are historically good compared to the company’s previous years. The average operating profit over 6 years is 4.6%, but last year it was as high as 6.2%. What better time to list. In my experience, a 6.2% operating profit is very exceptional in this industry, and the CEO said the same in the interview. Maintaining the current level as a target is otherwise realistic, but it’s hard to see such a high operating profit % in the future. I hope I’m wrong.

I see Kreate more as a specialized player (=GRK is more omnivorous). However, it is probably still the best and most sensible comparable. Here are Kreate’s corresponding figures for comparison.

KREATE
million euros | 2024 | 2023
Revenue | 275.5 | 320
EBITDA % | 5.5% | 4.4%
Operating profit % | 3.20% | 2.4%
Equity ratio | 33.2% | 31.8%
Order book | 176.6 | 196.3
Average ROE for the last six years: 17.45%

GRK is thus larger in figures, more profitable, more self-sufficient, and has a higher ROE. Of course, stock exchange obligations will eat a small part of this profitability in the future.

As a light note, it should be mentioned that in the Kalasatama to Pasila railway project, the Karaatti alliance (GRK and Afry) side was completely finished before even half of the paving was laid on the Sörkän Spora alliance (Destia, Sweco, WSP) side, most of the light traffic lanes were unpaved, let alone all the soil materials were even in place. Quite a contrast when on one side of the border it’s green and plants are in bloom, and on the other side of the border there’s crushed stone and construction fences.

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GRK’s order book is strong, and this adds even more to the order book for next year;

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Subscriptions can begin on Friday, price 10.12 euros per share.

The subscription period for the public offering, institutional offering, and personnel offering begins on Friday, March 21, 2025, at 10:00 AM. The subscription period for the public offering and personnel offering ends, according to the release, on March 28, 2025, at 4:00 PM. The subscription period for the institutional offering ends on April 1, 2025, at 11:00 AM.

Trading is scheduled to begin on the stock exchange’s pre-list on April 2, 2025, and on the main list on April 4, 2025. The company’s trading symbol is GRK.

The company aims to raise approximately 30 million euros in gross proceeds through an offering of approximately 3 million new shares. GRK states in the release that the value of the IPO is approximately 113 million euros, assuming that 30 million euros in gross proceeds are raised in the listing.

The subscription price is 10.12 euros per share in the public and institutional offerings, and 9.11 euros per share in the personnel offering.

A total of 6,755,911 existing shares are offered for sale by the company’s previous shareholders, so the preliminary maximum number of shares available in the subscription offering is 9,730,319 shares.

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Good morning, the prospectus seems to be available already. What are people’s thoughts on the IPO here? At least the company has secured impressive anchor investors, and with the management also investing their own money, confidence in the company seems sufficient. I’m particularly wondering if the company can continue its growth and maintain its margins, so that EPS rises at the same or roughly the same pace as in previous years. Participating in the offering is starting to look a bit tempting.

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Here’s Esa Juntunen’s IPO analysis

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I should probably participate in this. A financially sound company that fits my portfolio in every way.
Market in Finland, Sweden and Estonia. Could the company possibly also participate in the reconstruction of Ukraine in the future? There will certainly be a need for infrastructure construction there.

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NOTE! The public offering can be suspended at the earliest on 27.03.2025 at 4:00 PM Finnish time.

I don’t yet see if the public offering has been closed. I have subscribed, so Nordnet shows that I have already made the subscription.

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An announcement would certainly be made about the suspension of the offering. I too have already made a subscription through Nordnet, and it seems I could subscribe even more.

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It will be interesting to see what happens. According to the media, the first offerings are the best, because it is important for every offering organizer that the offerings succeed. Offering organizers earn significant sums in these arrangements. A failed offering means a significant loss of money and reputation in the future. Thus, it is likely that the offering pricing has been carefully considered for a long time, so that the situation after the offering is satisfactory to all. Even if the price remains at ±0, it is already a result of proper consideration. It has never been assumed that one should always get a quick profit. Investing is an endurance sport.

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Here are the signs of danger when Nordea has pledged to make support purchases. It’s quite likely that the offerings have gone wrong with this setup. Everyone remembers Rovio too. Does anyone recall an offering where Nordea was involved and it would have been priced significantly below comparables, leading to a euphoric stock market opening? If the offering is canceled, the organizing party can look in the mirror. What was GRK’s valuation in that previously canceled offering?

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Something about this IPO bothers me that I can’t explain to myself. Perhaps at this point, I have to trust my intuition and skip this IPO, as I also intend to do with Nokian Panimo. Sometimes intuition has been wrong too, when I recall Kojamo’s IPO. I’ll calmly observe later how these companies fare on the stock market. In itself, the shares of the brewery might potentially be better, perhaps then bought from the stock market, as almost all domestic, even slightly larger, breweries have been acquired by larger players – with the exception of Olvi, as its ownership is cemented to a foundation. This could be a so-called exit plan for the brewery.

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I myself have participated in quite a few offerings over the years, but with GRK, it was easy to say no thanks right away. Profit and revenue have risen sharply in recent years, and it’s being pushed onto the stock market at its peak, while it’s stated that no growth is expected in the coming years. From the Finnish and global stock markets, you can now get many businesses with a P/E of 12, which GRK demands for its construction-related operations for which no growth is expected for years, and where the risks are clearly higher than in many other sectors.

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Are the offering results coming on Monday? Or only on Tuesday? Trading starts on Wednesday, will 11 euros be broken immediately?

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Jussi Halme has made a video about GRK. :slight_smile:

Finnish infrastructure builder GRK is coming to the Helsinki Stock Exchange! The company has grown rapidly and expanded to Sweden and Estonia, but does it have the prerequisites to succeed on the stock exchange? I go through GRK’s background, financial figures, competitive situation, and IPO pricing – and whether this is a good deal for investors.

:backhand_index_pointing_right: How does GRK differ from other construction companies?
:backhand_index_pointing_right: Is the IPO price fair or overpriced?
:backhand_index_pointing_right: What are the biggest risks and opportunities?

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Sold very well
GRK Infra Oyj’s institutional offering is oversubscribed and the subscription period has been suspended | Kauppalehti

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If the institutional offering is oversubscribed multiple times, then the entire offering is as well.
However, only 0.6 million shares were reserved for the public offering, and over 9 million for institutions.

A share issue of approximately 30 million euros and a share sale of up to 6,755,911 sale shares. In the Public Offering, a maximum of 500,000 shares are initially offered, and in the Institutional Offering, a maximum of 9,130,319 shares are initially offered. In addition, in the Personnel Offering, a maximum of 100,000 employee shares are initially offered. Over-allotment option: initially a maximum of 1,459,547 optional shares solely to cover oversubscription situations.

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Quick Wins Available Again

GRK’s public offering is oversubscribed | Kauppalehti

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