An investment instrument is being created between the Stock Exchange, the Bulgarian Development Bank (BDB) and private investors for the financing of small and medium-sized enterprises with full transparency. This was announced by the Minister of Innovation and Growth, Alexander Pulev, during a meeting with the Executive Director of the Bulgarian Stock Exchange /BSE/ Prof. Dr. Manyu Moravenov and the Deputy Chairman of the Board of Directors of the BSE Vasil Golemanski.
Pulev emphasized that the limit for loans at the Bulgarian Development Bank remains up to BGN 5 million, and SMEs remain the bank’s target segment.
According to him, more active interaction with the Bulgarian Stock Exchange will direct part of the bank’s lending and investment portfolio to the public markets. “So we address two problems. The Bulgarian taxpayer’s money will be publicly and transparently managed. Everyone will be able to publicly familiarize themselves with everything, the processes will not take place in the dark, and the documents will only be in some drawers, offices and archives,” said Pulev. He added that the capital markets will be supported by bringing into the process a serious institutional player such as BDB.
Pulev summarized that two innovations are being made. “The first – the product range of BDB is expanded through co-financing together with large financial organizations with an impeccable reputation. BDB will have complementary financial capacity and risk will be managed according to the gold standards of development banks in Europe. The aim is for BDB not to push but to supplement capital, especially where private financing is lacking, he explained. The second innovation is made for maximum publicity of the work, being expressed in financing through the public markets and BSE. “This is how we will provide new channels for financing SMEs,” Pulev said.
When asked about the management of the BDB going forward, he replied that at least two more members will be added to the current three members of the Supervisory Board and, even in its expanded composition, the supervision of the BDB will receive a total of less salaries than the previous composition of three people.
The Executive Director of the BSE Assoc. Dr. Manyu Moravenov stated that it was the first time that the Minister of Innovation visited the Stock Exchange and he was pleased that one year after the launch of BEAM – the market and nine successful IPOs – the decision to make an investment instrument between the Stock Exchange and the BDB represents a strong and timely initiative. According to him, there is existing interest from companies for financing through BEAM of BGN 300 million for the next 12 months. Due to the crisis in the stock markets, investors are currently very careful and the institutional support through the proposed investment instrument will have a strong stimulating effect on them, he pointed out. The investment instrument will fully transparently finance capital raising through the Exchange. The instrument will finance both debt – through participation in bond issues issued through the Stock Exchange, and equity – in the IPO.
According to him, BDB will mainly be committed to providing resources for the debt financing of the joint project, and BSE will be committed to attracting resources for the part of equity financing. The investment vehicle will attract additional funds from institutional and individual investors on the Exchange to achieve its goals, and it is envisaged that it will itself carry out an IPO after its establishment.
Pulev added that projects with a “green” profile and a social orientation will be targeted, which will provide new channels for financing small and medium-sized enterprises by means of investing in bonds, including and “green” bonds and in equity instruments.
The head of the minister’s office, Krasimir Yakimov, announced that a working group is being created with BDB, BSE and MIR to build the mechanism for structuring this investment process with a view to complying with the applicable regulatory requirements.