Which companies might benefit from the capital product of the exchange development fund?
In short: for companies dedicated to public operation and a stock market presence, aspiring to these goals in the short or medium term. There are no sectoral limits, the target company can be an industrial supplier, or a fast-growing IT company. The received capital investment can be used to realise various types of growth agendas, from conquering a foreign market to developing an IT system that ensures financial transparency. We define the concept of being ready for public offering very broadly. The important thing is that the business offer must be suitable for the market: the National Capital Development Fund can only realise transactions with the involvement of private investors.
As of this year, Széchenyi Venture Capital Fund Management Ltd. will be managing four capital funds with a total value of HUF 63 billion. How does the National Capital Development Fund fit into these activities?
The final goal of all SZTA capital funds and, ultimately, of the Budapest Stock Exchange as well, is to allow innovative Hungarian enterprises to continue growing here, at home, and to make sure that they aren’t bought by foreign investors – or at least, not too soon. The idea is for as many of them as possible to export and become, in the best sense of the word, professional, Hungary-based large enterprises. The Capital Development Fund fits this mission organically. Hungarian enterprises founded after the regime change are starting to feel that they need to level up in order to operate competitively. What we want to show them and the new generation companies that are often on the lookout for foreign investors is that the best place to successfully achieve their growth agendas is the Hungarian stock market.
How open are Hungarian entrepreneurs to equity financing?
Almost everyone realises that we will not be receiving as much in EU funds as before – especially regarding SME grants that do not have to be repaid. While people are very familiar with bank financing, loans – due to their internal logic – can only be successfully used to finance more conservative projects. In order to realise innovative ideas, risk-tolerant (or even risk-seeking) capital or stock market investors are needed. Most people are afraid that a new investor/partner would take control over the company. In our case, this is virtually impossible, as SZTA capital funds and the Capital Development Fund can only own 49% of a company. We operate as silent partners. Another misunderstanding is that capital investment is for IT startups only: many of our most successful investments are with automotive or machinery industry suppliers, training, or water industry companies. We are working on turning this around with the BSE and our other partners, so that equity financing can become the driver of Hungarian economic growth and a guarantee for competitiveness.