We assist Latvian small and medium enterprises with capital origination on a securities exchange

Signet Bank and the Eversheds Sutherland Bitāns law office are inviting clients of the bank to participate in the EU-funded programme for financing on capital markets – “Support for small and medium enterprises attracting financing on capital markets”.

The aim of the programme is to help small or medium enterprises (SMEs) in Latvia to attract funding via capital markets, boosting their competitiveness performance internationally and facilitating the development of the capital market in Latvia.

This is the first programme in the Baltics of its kind. It will be administrated by the Central Finance and Contracting Agency (CFCA), which intends to arrange an open tender on a quarterly basis.

 This programme provides an extra stimulus for entrepreneurs in Latvia to consider funding through securities issues and with the intermediation of stock exchange. The bank is willing to handle the process in its entirety – from preparing a company for a securities issue to meetings with investors, securities settlement, and listing. This kind of financing through issues of bonds and initial public offerings of stock is not widespread in Latvia at the moment, but we see great potential in it. In Estonia, for instance, many businesses are successfully issuing bonds as a good alternative to bank loans.

Roberts Idelsons, CEO at Signet Bank

This programme can provide great opportunities for many entrepreneurs in Latvia looking to compete with their goods and services on the global market. By originating capital on a securities exchange, SMEs receive more than an investment in growth without providing collateral or personal guarantees. It is also a great way to review corporate governance and make internal processes more transparent – important steps on the way to an initial public offering (IPO), and useful practices in and of themselves since they enable sustainable business development.

Mikus Freimanis, Eversheds Sutherland Bitāns Capital Markets practice group manager

The support programme will be implemented as a pilot project within the current European Union funding planning period, and the initial amount of available financing is planned at EUR 1,000,000 million, including EUR 800,000 to support shares’offerings and EUR 200,000 to issues of debt securities (bonds).

Support to SMEs will be issued in the form of a grant, covering 50% of attributable costs, but no more than EUR 100,000 per applicant in the event of a shares’offering, or no more than EUR 20,000 in the event of issuing debt securities (bonds).

Support will be available for the following attributable costs:

• payment for services of the issue arranger (investment bank);
• expenses on preparing a prospectus or securities registration document;
• due diligence costs;
• expenses on legal, financial, tax, audit advice, certified consultants.

An essential criterion that a recipient of support must fulfil is ensuring successful listing of one’s securities on the AS “Nasdaq Riga” list (Baltic Regulated Market or Baltic Alternative market – “First North”) within no more than two years following conclusion of an agreement on implementing the project with the cooperating institution. A successful shares’offering is an issue that originates at least EUR 500,000 in financing. No minimum origination threshold is in place for issuing of debt securities.