World Bank, AmCham workshop helps financial market professionals learn how to benefit from private equity market
The American Chamber of Commerce in Albania, in cooperation with the World Bank, organized a workshop for finance professionals, “The Role of Private Equity in Investing for Businesses in the Western Balkans, and How Small and Medium Enterprises Can Benefit From These New Ways of Financing”.
Businesses in Albania and in the Western Balkans region continue to rely on traditional forms of financing, alternative sources of capital do not exist, and the private capital market is at an early stage of development. This low penetration happens at a time when 95 percent of businesses in Albania are Small and Medium Enterprises (SMEs), making them the backbone of the Albanian economy. SMEs also represent 83 percent of employment and 75 percent of the GDP, but they receive only 28 percent of credit funding.
As a result, the workshop aimed to provide proper advice to all business categories on how to best capitalize on this emerging private equity market. It included modules explaining the functioning of the market and its stakeholders as well as how to develop and execute an investor-entrepreneur agreement that benefits both parties. If entrepreneurs invest their money in the capital market, they can have a higher rate of return and can become shareholders of different companies. They might also get involved in lending to other businesses or even the government. Businesses in need of liquidity, on the other hand, can turn to this private equity market and save money by avoiding high interest rates on loans or having to put up collateral.
These types of agreements and all the other information on how to establish this new and emerging capital market, have been the focus of a presentation led by international expert on private equity investment, Mr. Gavin Ryan, who also serves as a special adviser to the World Bank and EBRD.
Workshop participants included actors that are already involved in this new market — leaders of established brands like Elvin Guri, CEO of the Empower Capital Fund and Enio Jaço, CBS
Executive Director and President of AmCham Albania as well as international capital market experts such as Michael Gold, Director General at Crimson Capital and Elga Ballta from the European Bank for Reconstruction and Development (EBRD).
Under the topic “Ready to Secure Equity Financing,” a panel helped to develop a discussion between keynote speakers and workshop participants. The donation period is running out and new or existing businesses need to have the right knowledge to navigate the capital market and find not just funding sources but business partners and their innovative ideas.
The role of advisers in the field of finance is taking on particular importance, Mr. Jaço noted, also explaining the role AmCham is taking with various partners in improving Albania’s investment framework, which is important for businesses and private equity investments. AmCham recently launched an initiative aimed at improving investment models in Albania. Mr. Jaço said that one of the key elements of the initiative is to increase competitiveness, which is strongly linked to access to capital.
“What the economy needs is new financing options that enable private capital. If we compare Albania with other countries in the region, we see that we are behind in finding new ways of financing. And one of the best alternatives is private equity financing,” Mr. Jaço said. “In this gap of access to funds there is a tremendous opportunity for all Albanian professionals to see and consider the private equity market as a real opportunity for the market and the economy.”
Explaining some of the features of the private equity market, Mr. Guri talked about the needed preparations for SMEs in Albania to take on the responsibilities brought by this type of financing — which more than anything else requires building trust and partnerships.
“Private equity has many benefits as it enables growth, but it comes at a cost. It limits independence. SMEs need to understand that a relationship of trust is not created in one day. Trust must be earned. Just signing the agreement is not enough for a successful partnership, and it is a process that requires transparency,” Mr. Guri said.
The one-day seminar promoted interactivity among the participants who expressed interest in further training in this area. The World Bank and AmCham agreed to explore other more advanced initiatives in the future aimed at professional training of Albanian experts on how to attract private capital.