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reduction of traditional debt and improvement of their balance
sheet ratios. Owing to the loss of trust, they will also
try to gain more independence from classic bank financing.
Here are some assumptions:
• Capital market funding will play a bigger role
• Diversification of funding in accordance with business
needs, considering key sales markets, investors’ profiles
and currencies will become key issues
• Looking for alternatives by way of approaching alternative
players and instruments will increase
• The importance of existing alternatives to financing,
such as factoring and leasing, will continue to rise.
Figure 2: Corporate bonds vs. bank loans in Europe
100%
80%
60%
40%
20%
0%
Source: ECB
12%
88%
Germany
31%
France
69%
43%
Great
Britain
Corporate bonds Bank loans
Equity capital markets: New issues (IPOs) still are having a
hard time due to uncertainty among investors, while
secondary offerings of established players are working. It is
currently virtually impossible for SMEs to raise new equity
capital in the public markets, in particular due to the
shortage of investors with the willingness or capacity to
invest in small tickets. Institutional investors in Germany,
such as insurers or pension funds, are legally restricted
regarding their investments in shares. We might see more
direct investments from family offices, HNWIs (high net
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57%
Photo: PantherMedia / Sergio Hayashi
worth individuals) and other asset pools. As a possible outcome,
we may see new infrastructure providers as operators
of platforms for raising capital for SMEs.
Debt capital markets: The corporate bond market has
shown significant growth over the past two years. However,
a distinction must be made between secondary offerings of
established capital market players and new issues of midcap
companies. While established players with a good
track record are focusing on institutional investors, SMEs
are concentrating on less sophisticated investors, who are
highly risk-sensitive in case of defaults. New loan platforms
and lending intermediaries are about to enter this market.
Alternative lending: Regardless of the ABS market collapsing
during the financial crisis, the role of securitised debt is
likely to increase. In particular, the bundling of claims resulting
from operational businesses seems to be attractive for
investors. Institutional structures such as “debt funds” are
one of the trends. Debt funds are vehicles which acquire
interests in debt claims at a discount and are financed by
investors providing equity capital to the fund. Insurance
companies are already quite active in acquiring real estate
assets. Furthermore, corporate conglomerates are increasingly
considering creating their own banking structures.
More independence from banks with direct access to
central bank liquidity is the main driver (e.g. E.ON, Siemens,
VW, etc.).
Conclusion
Financial market regulation will change corporate financing.
Flexibility regarding instruments and lenders is the name of
the game. This holds true for the financing of real economy
businesses, as well as for investment strategies. In the
financial intermediary space, “shadow banking” will play an
important role and it remains to be seen how regulators and
supervisors will deal with this.