Business development requires raising capital – local companies choose Signet Bank for growth

The effects of the global crisis over the past three years have clearly impacted Latvia’s economic and financial stability, causing changes in the banking sector and the Latvian business environment as a whole. The changes and external factors have encouraged local companies to critically review their business development strategies and have contributed to the growing interest of entrepreneurs in alternative financing options, including capital market financial instruments. 

According to Signet Bank opinion survey of Latvian entrepreneurs*, the majority of Latvian entrepreneurs, or 83%, have heard about capital market financial instruments: 42% about raising capital from financial investors, 22% about issuing bonds, 19% about listing company shares on the stock exchange.

Compared to other developed countries, Latvian companies currently use very few alternative financing sources, including capital market instruments, and are highly dependent on the availability of commercial bank financing, which limits the development potential of both the companies themselves and the country’s economic growth.

The lack of knowledge and understanding of the opportunities and advantages of the capital market has a significant impact on the number of ambitious businesses and entrepreneurs in Latvia – currently only 17% of Latvian entrepreneurs are considering using capital market opportunities for their business needs, while 83% of Latvian entrepreneurs have no plans to use capital market financial instruments. This is largely due to a lack of knowledge about the opportunities offered by the capital market, which is recognized by more than 57% of Latvian entrepreneurs surveyed.

Signet Bank goal is not only to provide effective alternative financing solutions, but to provide local businesses with the knowledge, resources and support needed to “unlock” the potential of the capital market and together create new pathways for sustainable business growth in Latvia.

Roberts Idelsons, Chairman of the Board of Signet Bank

Capital market – an opportunity to achieve ambitious business goals

For more than four years, Signet Bank has been actively engaged in developing alternative financing solutions using capital market financial instruments – bond and equity issues. Since 2020, more than 40 Latvian companies have chosen Signet Bank capital market financing options to boost their business development, which has resulted in raising around EUR 1 billion in additional funding for local companies.

We want to facilitate faster growth and access to more financing opportunities for Latvian companies. The capital market provides opportunities for entrepreneurs to grow the value of their business faster and for investors to get a better return on their capital. We are the ones who bring together entrepreneurs in need of financing with entrepreneurs who have free investable capital. And we do it efficiently by structuring deals carefully and managing risks.

Edmunds Antufjevs, Head of Investment Banking at Signet Bank 

Signet Bank has been a partner in every one of our bond issues and was also the only partner when we refinanced our EUR 30 million Latvian bond in 2021 and was one of the partners covering the Baltic region when we refinanced our Eurobond. The Bank has a broad and deep pool of educated investors, and that is important. The Bank’s clients are very keen to invest in securities.

Māris Kreics, Chief Financial Officer of Eleving Group

Companies use the bonds for a variety of purposes – to finance working capital, investment plans and to simplify and clean up their liability structure. Bonds as a source of financing are also widespread among real estate companies – both for financing development projects and as an additional source of funds at the holding company level, as well as in the non-bank lending sector, which traditionally has limited access to bank financing due to the specific nature of the sector.

Signet Bank was excellent in arranging ELKO Group’s bond issue, which provided us with the necessary working capital to remain competitive and continue to grow. It should be stressed that the issue was organized in a relatively short period of time and negotiations with investors resulted in 2.5 times more demand than originally proposed.

Svens Dinsdorfs, Director of ELKO Group

Cooperation with Signet Bank and the bond issue as a way of raising finance has been the best decision. Investor demand exceeded supply by a factor of one and a half, and as a result we issued a bond of EUR 15 million. The funds raised were used to implement the Group’s investment plan to expand and diversify the range of services offered by the Group’s companies, while strengthening its position in waste management, grounds and urban maintenance.

Guntars Kokorevičs, Chairman of the Supervisory Board of CleanR, a leader in the environmental services sector

Signet Bank continues to support local companies on their path to better financial well-being and growth – six bond issues have already been organized for 2023, raising over EUR 122 million for business development of Latvian companies.

Since 2020, there have also been four stock market listings of Latvian companies, showing that ambitious local businesses are well placed to raise finance for their growth plans also through equity instruments. The latest IPO took place in November this year, when one of the largest poultry and egg production companies in Latvia, AS APF Holdings (Alūksnes putnu ferma SIA and Preiļu putni SIA), listed its shares on the Nasdaq Riga Stock Exchange.

The IPO of APF Holdings was not only the only IPO in Latvia this year, but also the only IPO in the last five years in which two Latvian pension funds have invested significant funds. This is largely to the credit of the Signet Banka team, as working with institutional investors requires a special approach. Also, looking back at the cooperation between APF Group and Signet Bank over time, we believe that this is a business school example of a bank successfully helping and supporting its client, going through the full cycle together from the initial lending of the investment idea to the successful IPO of the further growth plans.

Jurijs Adamovičs, Founder and Chairman of the Board of APF Holdings AS

Learn more about your company’s growth potential here: https://signetbank.com/en/book-an-appointment/

*Latvian entrepreneurs from the manufacturing, trade, construction and services sectors took part in the survey. The survey was conducted in cooperation with the media agency “Mindshare Latvia” in May 2023, and asked Latvian entrepreneurs (506 Latvian business leaders) about their financial situation, availability of diversified financing and business environment in the last 12 months (May 2022 to May 2023), their business development plans and their expectations about the need for additional financing in the next 12 months (May 2023 to May 2024).