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CBS Starts the First Discussions on Private Equity Market

Creative Business Solutions (CBS), the leading Albanian business consulting company, started the very first discussion on the benefits of Private Equity Funds in Albania.

The establishment of such a market would represent an important turn in the development and growth of small and medium enterprises in the country. Albania's financial sector has advanced considerably in the last two decades by expanding its bank loan portfolio, deposits volume and bank services. Regardless, alternative financing means, such as the private equity, are almost nonexistent in the Albanian market, at a time when 95 percent of businesses in Albania are SME-s. They represent the main pillar of Albania's economy. These businesses account for 83% of the employment rate, 75% of the country's GDP and yet they only get 28% of financing, hence creating the need for establishing a private equity market. In the framework of USAID-funded project "Smart Capital", CBS launched a three-day workshop on private equity market with a new class of professionals.

 

Albanian Professionals Are Being Offered International Expertise.

The three-day CBS Executive Training Program was chaired by Gavin Ryan, an experienced Emerging Markets and Private Equity Fund Manager. The workshop was attended by bankers, financial consultants, high rank officials from the Ministry of Finance and entrepreneurs open to such investment possibilities. During the workshop, they received the necessary information and expertise on finding companies with a potential for expansion, carry out their financial assessment, structuring the shareholder’s agreement and exiting an investment. Gavin Ryan offered a detailed presentation through group exercises and shed light in the whole process applied in private equity market. He said that Albania is a country that can gain a lot from such a market. "Let's take the example of Armenia, which is a country similar in size to Albania. A €30 million equity fund was launched two years ago and it has been a great success," Ryan said. "This form of financing is attractive to small and medium enterprises but also to foreign investors who are interested in the Balkans as a region," he added. According to Ryan Albania, by being a country destined to become part of the European Union, delivers an extraordinary guarantee for foreign investors. "Private Equity has the effect of improving the quality of company management and providing company owners with an expert partner to support their faster growth," Ryan declared. According to him, entrepreneurs and CEOs in Albania, must ask themselves if they would rather own 70 percent of shares of a successful company or 100 percent of a least successful company. "If you choose the first, then Private Equities would be a great success in Albania," he concluded.

 

Solutions Provided by Private Equity Market

According to Alban Duka, expert in alternative means of financing at Creative Business Solutions, SMEs in Albania face hardships in getting financing, therefore private equity funds would provide better solutions. "In our daily contacts with SMEs, we noted that over 70 percent of enterprises face hardships in getting financing, especially from second tier banks," he said, adding the importance of private equity market, which would provide these enterprises with capital, technical assistance and contemporary management practices. Private equity funds can be a possible alternative to financing for many companies. These funds are offered by institutional investors (pension funds, investment funds, foreign development banks etc.) who in return get a certain share in the company.

 

A Private Equity Fund in Albania?

Enio Jaço, Executive Director of CBS highlighted the elevated interest of participation from professionals and entrepreneurs, which was key to the success of this executive training. Jaço was optimistic about starting a formal process to open the first Private Equity Fund in Albania. He emphasized the impact that this initiative would have on the development of enterprises and the Albanian economy. "This will be the first Private Equity Fund in Albania dedicated to SME financing. Time is ripe for the Albanian economy to receive new financing alternatives that enable private capital. It will be a great opportunity for Albanian professionals and the future of SMEs here” Jaço said.