Wanted: A new transfusion of investment cash

Wanted: A new transfusion of investment cash

The Baltic region may be one of the great examples of recovery and growth, what it still lacks are fully functioning equity markets.

In the first of a planned series of high-level business summits, BQ Baltic Magazine and the Baltic Management Institute (BMI) of Vilnius will this autumn hold a high level summit devoted to the issues surrounding Public & Private Equity in the Baltic.

Held on October 9, 2014 in Vilnius, the summit will invite leading academics, business leaders and officials to share their views on measures to develop Baltic equity markets, offering practical guidance for companies seeking to raise capital for expansion, and for investors seeking to tap into the Baltic economic growth story. The day-long session promises to provide the clearest and most comprehensive picture to date of the current state and – more importantly – future prospects for equity markets in the three Baltic states. Questions to be addressed include: Why do the Baltic stock markets remain underdeveloped? How could more companies be attracted to list? How to catch the eye of international institutional investors? And can the region compete with the Warsaw bourse?

Toby Moore, managing partner of Riga-based Imprimatur Capital, a keynote speaker at the event, said: “The liquidity problem in the Baltics is a bit of a chicken and egg situation.

Since many of the most successful companies went private in the early-mid 2000s, now companies often don’t want to list on Tallinn, Riga or Vilnius, because investors aren’t there to buy the stock. And investors won’t buy the stock, or won’t push the liquidity because there’s not much stock to push.”

Participants will examine the Baltics’ new private equity initiatives and assess their success at raising and allocating cash to promising companies. They will also take a hard look at the evolution of governance culture in the Baltics, and how that impacts companies’ willingness and ability to raise capital on local stock exchanges.

Finally, the session will look at whether Baltic governments are willing and able to pay the political price of listing more state-owned companies, and if so, which ones, why, and how? Bryan Bradley, a director of BMI, said: “Better functioning equity markets would benefit all investors who believe in the Baltic growth story, and would have more opportunities to actually invest in the region’s potential.”

“That means inflows of foreign capital to support further economic growth. The best Baltic companies would have access to more – and more diverse – financing to support expansion. Current stock market investors here would benefit from increased liquidity, and for private-equity investors, selling shares on the exchange would become a more viable exit option.

The Baltic governments, by selling more shares of state enterprises to the public, could get sizable one-time cash inflows, reduce the need for state financing of large infrastructure projects and create incentives for these companies to operate more transparently and more effectively.”

As Bradley puts it: “Political interest in capital market development seems weak in Baltic countries. Even politicians that understand the problem tend to give it low priority. some members of Lithuania’s government are talking about the possibility of considering the matter. Meanwhile, the stock exchanges continue to lobby the governments for support.”

BMI is seen as the ideal location for this far-ranging discussion as its professors, drawn from top European business schools, include several advisers to big players in the international capital markets, also authorities on corporate governance in the Nordic-Baltic region. A number of BMI alumni also play leading roles in the Baltic capital markets, from the stock exchange to asset management companies and pension funds to financial regulators. Bringing them together will ensure discussions that are locally relevant but placed in a global context.

Said Bradley “It’s bound to spark fresh ideas, insights and initiatives, which is what business leaders who attend the event can expect to take home. Along with a larger and deeper professional network, of course.”

Charles Cormack, chairman of CCG and BQ Baltic co-owner, and another participant in the Oct 9 seminar, said: “We are very excited to be announcing the first BQ Event, in association with the Baltic Management Institute. Our aim is to develop a series of thought leading events, bringing together leading local and international experts to discuss key business issues in the Baltic. We hope that all of these events will become the key events in the calendar of business people across the Baltic States.” A full report of the event will appear in the autumn issue of BQ Baltic (for subscription details see the inside back page of this issue.)

For full details of the BQ-BMI Executive Summit on Public & Private Equity in the Baltics, please contact: Bryan Bradley, Communications Director at BMI Management Institute,
T: (+370) 248 7248 E: bryan@bmi.lt