Emergent Countries - Going Public as a Financing Option

EMERGENT COUNTRIES – GOING PUBLIC AS A FINANCING OPTION

- ROMANIA STUDY CASE -

Going public as a financing option

For worldwide&europe – going public IS a sound capital budgeting choice

Romania

Lowest stock market in terms of capitalization

Liquidity problems

Romania Economic Outlook

Pressure on operating margins

Buyouts

Increasing payroll expenses

What do companies do?

Apply for credit – worsening access lately

Private equity - investment funds

IPO – 2 or 3 IPOs per year, directly related to Bucharest Stock Exchange low

capitalisation

Small and Medium Enterprises:

- there is a need for investments

- accounting and fiscal challenges

- working capital dysfunctions

Biggest financing needs: real estate, construction & engineering, industry (textile, manufacturing)

Negative factors:

- low financial education of SME management and shareholder regarding:

 auditor’s role and added value

 alternative financing options (cash or credit)

 reluctance to having a representative nominated by the Authorised Adviser to the Supervisory Board of the Issuer.

- strong competition regarding IPO financial services – Alpha Finance, Raiffeisen Capital & Investment (usually all banks have a finance division)

- the EU funds, which are becoming more and more accessible to all the companies

- a strong market for private equity deals (investment funds - Advent, Enterprise Investors, Trigon Capital)

- current