The document provides an overview of financial tools and capital markets in the Baltic states, including loans, bonds, stocks, and new instruments. It summarizes bond market volumes in 2017, noting that volumes have been increasing. In Latvia, the market was driven by several banks issuing bonds, while in Estonia state-owned companies and real estate firms were prominent issuers. It also discusses the prospects for public offerings and changes to the Prospectus Directive that may help small and medium enterprises raise capital.

1. Financial Toolbox for the
future CFO’s
2
Aare Tammemäe
December 9th, 2017

2. Your partners for growth
Redgate Capital
Redgate Capital is an independent investment banking company that offers a wide
range of financial advisory services, including commercial real estate, M&A and capital
raising primarily to Baltic medium-sized companies.
3

3. Capital markets are the engine room of modern
economies – they help to mobilize and price
capital, and to hedge financial risks

4. 5
Proxy for capital markets
VC & PE attractiveness index
Lithuania rank 40 Score 64

5. 6
Lithuanian financial markets – what is missing?

6. Estonian capital markets
2
2014-2017 AUM OF ESTONIAN PENSION FUNDS
0
500
1000
1500
2000
2500
3000
3500
4000
jaan
veebr
märts
apr
mai
juuni
juuli
aug
sept
okt
nov
dets
jaan
veebr
märts
apr
mai
juuni
juuli
aug
sept
okt
nov
dets
jaan
veebr
märts
apr
mai
juuni
juuli
aug
sept
okt
nov
dets
jaan
veebr
märts
apr
mai
juuni
juuli
aug
sept
okt
2014 2015 2016 2017
MEUR
4
6
8
10
12
14
16
18
BEUR
Kodumajapidamised Ettevõtted ValitsemissektorHouseholds Corporates Government
2014-2017 TERM DEPOSIT VOLUMES IN ESTONIA
„Demand side of the market remains strong“

7. 8
Financing toolbox for the companies

8. 9
Financing toolbox for the companies
Loans
Stocks
Bonds
New instruments

9. 10
Loans

10. 11
Bank loans in Estonia
Estonian corporate loan book 7,3 billion euros
Interest rate for long-term bank loans 2,28%
Interest rate for short-term bank loans 3,2%
Most critical pre-conditions for banks to provide loans?
……….
Covenants, covenants…
……….
How to increase „bankability“ of companies?
……….

11. 12
Bonds

12. Baltic Corporate Bond Market Volumes
2
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
450,000,000
500,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EUR
EE LT LV
BONDS DENOMINATED IN EUR ISSUED IN BALTICS 2005-2017 (CORPORATE BONDS)
SUMMARY
• Both amount on new bond
issues and total nominal value
has been increasing
• In 2017, market sentiment has
been mostly been driven by
LV banking sector:
• ABLV
• BlueOrange
• Norvik
• Rietumu
• Corporate bond market in
Estonia

13. Listed Corporate Bond market in the Baltics
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[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0 1 2 3 4 5 6 7 8 9 10 11 12
Couponinterest
Maturity
Capital raising curve – credit risk /coupon / maturity
1. No bank financing
available
2. Bank financing together
with capital market
instruments
3. Capital markets provide
same or even better terms
than bank financing
1
2
3
Non-bank Consumer credit providers
Other corporates
Banks
2014-2017 listed corporate bonds in the Baltics
Source: Nasdaq Baltic
Different type of capital is
required for different stages of
development

14. Baltic Corporate Bond Market Volumes
2
2017TOP 15
LITHUANIA
Issuer Nominal value
UAB"EBV FINANCE" 8,664,400
UAB'SME FINANCE' 3,960,000
AB "BALTIC MILL" 3,000,000
UAB'BROLIS
SEMICONDUCTORS' 2,721,804
UTIISIB "PROSPERUS
STARTEGIC RE FUND" 2,140,000
UAB'SUTELKTINIO
FINANSAVIMO FONDAS' 2,015,000
BNP FINANCE, AB 1,900,000
UAB DEBITUM FORI 1,336,400
UAB "PILAITĖS TERSOS II" 1,030,000
UAB'INVESTICIJŲ
VALDYMAS"PROSPERUS" 1,000,000
UAB'ĮMOKA LEGVAI" 988,800
UAB "Polenera" 967,600
AB SEB BANKAS 538,215
AB'UKMERGĖS GELŽBETONIS' 376,506
„Consumer Credit“
LATVIA
Issuer Nominal value
ABLV Bank AS 205,000,000
BlueOrange Bank AS 53,200,000
BBG AS 33,128,000
Leanor Invest LP 24,500,000
NORVIK BANKA AS 24,300,000
AS Attīstības finanšu institūcija
Altum 20,000,000
Mogo AS 20,000,000
TWINO SIA 17,710,000
European Lingerie Group AS 11,000,000
AgroCredit Latvia SIA 10,000,000
New Hanza Capital AS 10,000,000
Rietumu Banka AS 10,000,000
Storent Investments AS 10,000,000
ELKO GRUPA AS 8,000,000
„Banks“
ESTONIA
Issuer Nominal value
Riigi Kinnisvara Aktsiaselts 45,000,000
FMLA OÜ 30,500,000
Exwise Oy 30,000,000
OÜ Transpordi Varahaldus 23,750,000
auto24 AS 16,155,050
Creditstar International OÜ 10,500,000
AS IuteCredit Europe 7,500,000
Aktsiaselts PlusPlus Capital 7,000,000
Vega Residents OÜ 6,500,000
UPP Olaines OÜ 6,215,000
UPP & CO KAUNO 53 OÜ 4,700,000
Loanstream SV1 OÜ 3,000,000
AS Baltika 2,778,125
Mainor Ülemiste AS 2,650,000
„LHV pension funds“

15. Baltic Corporate Bond Market Volumes
2
2017 TOP 15
LITHUANIA
Issuer Nominal value
UAB"EBV FINANCE" 8,664,400
UAB'SME FINANCE' 3,960,000
AB "BALTIC MILL" 3,000,000
UAB'BROLIS
SEMICONDUCTORS' 2,721,804
UTIISIB "PROSPERUS
STARTEGIC RE FUND" 2,140,000
UAB'SUTELKTINIO
FINANSAVIMO FONDAS' 2,015,000
BNP FINANCE, AB 1,900,000
UAB DEBITUM FORI 1,336,400
UAB "PILAITĖS TERSOS II" 1,030,000
UAB'INVESTICIJŲ
VALDYMAS"PROSPERUS" 1,000,000
UAB'ĮMOKA LEGVAI" 988,800
UAB "Polenera" 967,600
AB SEB BANKAS 538,215
AB'UKMERGĖS GELŽBETONIS' 376,506
„Consumer Credit“
LATVIA
Issuer Nominal value
ABLV Bank AS 205,000,000
BlueOrange Bank AS 53,200,000
BBG AS 33,128,000
Leanor Invest LP 24,500,000
NORVIK BANKA AS 24,300,000
AS Altum (state financing and
guarantee agency) 20,000,000
Mogo AS 20,000,000
TWINO SIA 17,710,000
European Lingerie Group AS 11,000,000
AgroCredit Latvia SIA 10,000,000
New Hanza Capital AS 10,000,000
Rietumu Banka AS 10,000,000
Storent Investments AS 10,000,000
ELKO GRUPA AS 8,000,000
„Banks“
ESTONIA
Issuer Nominal value
Riigi Kinnisvara Aktsiaselts 45,000,000
FMLA OÜ 30,500,000
Exwise Oy 30,000,000
Osaühing Transpordi Varahaldus 23,750,000
auto24 AS 16,155,050
Creditstar International OÜ 10,500,000
AS IuteCredit Europe 7,500,000
Aktsiaselts PlusPlus Capital 7,000,000
Vega Residents OÜ 6,500,000
UPP Olaines OÜ 6,215,000
UPP & CO KAUNO 53 OÜ 4,700,000
Loanstream SV1 OÜ 3,000,000
AS Baltika 2,778,125
Mainor Ülemiste AS 2,650,000
„LHV pension funds“

16. „LHV pension funds“
Baltic Corporate Bond Market Volumes
2
2017 TOP 15
LITHUANIA
Issuer Nominal value
UAB"EBV FINANCE" 8,664,400
UAB'SME FINANCE' 3,960,000
AB "BALTIC MILL" 3,000,000
UAB'BROLIS
SEMICONDUCTORS' 2,721,804
UTIISIB "PROSPERUS
STARTEGIC RE FUND" 2,140,000
UAB'SUTELKTINIO
FINANSAVIMO FONDAS' 2,015,000
BNP FINANCE, AB 1,900,000
UAB DEBITUM FORI 1,336,400
UAB "PILAITĖS TERSOS II" 1,030,000
UAB'INVESTICIJŲ
VALDYMAS"PROSPERUS" 1,000,000
UAB'ĮMOKA LEGVAI" 988,800
UAB "Polenera" 967,600
AB SEB BANKAS 538,215
AB'UKMERGĖS GELŽBETONIS' 376,506
„Consumer Credit“
LATVIA
Issuer Nominal value
ABLV Bank AS 205,000,000
BlueOrange Bank AS 53,200,000
BBG AS 33,128,000
Leanor Invest LP 24,500,000
NORVIK BANKA AS 24,300,000
AS Attīstības finanšu institūcija
Altum 20,000,000
Mogo AS 20,000,000
TWINO SIA 17,710,000
European Lingerie Group AS 11,000,000
AgroCredit Latvia SIA 10,000,000
New Hanza Capital AS 10,000,000
Rietumu Banka AS 10,000,000
Storent Investments AS 10,000,000
ELKO GRUPA AS 8,000,000
„Banks“
ESTONIA
Issuer Nominal value
Riigi Kinnisvara Aktsiaselts 45,000,000
FMLA OÜ 30,500,000
Exwise Oy 30,000,000
Osaühing Transpordi Varahaldus 23,750,000
auto24 AS 16,155,050
Creditstar International OÜ 10,500,000
AS IuteCredit Europe 7,500,000
Aktsiaselts PlusPlus Capital 7,000,000
Vega Residents OÜ 6,500,000
UPP Olaines OÜ 6,215,000
UPP & CO KAUNO 53 OÜ 4,700,000
Loanstream SV1 OÜ 3,000,000
AS Baltika 2,778,125
Mainor Ülemiste AS 2,650,000

17. 18
Bond market in Baltics
5,23 billion eurot (Baltics)
Ca 300 million new bond issues per year
(listed and non-listed, without banks)
Coupon interest 6-15% for bonds, why so high?
……….
Covenants, covenants…
……….
Which companies will benefit from issuing high-yield bonds?
……….

18. 19
Stocks

19. 20
Stock market in Estonia
7,3 billion euros (Nasdaq Baltic market cap )
2,5 billion euros Nasdaq Tallinn market capitalization
Last IPO in 2016 – LHV share issue of 14 mln eur
(46 mln eur total subscription; 5 456 investors)
Expected return over 15%, why?
……….
Shareholding structures…
……….
Which companies would benefit from issuing stocks?
……….

20. 21
New Instruments

21. 22
Alternative fund raising platforms
37 MEUR, 9147
investors, avg
return 12,5%
24 MEUR, 16795
investors, avg
return 27%

22. 23
Takeaway
• Bankloans still important tool in the toolbox
• Traditional businesses (asset heavy, solid cash flows)
• Investment loans, working capital loans
• Acquisition financing, incl leveraged buy-outs
• Key challenges: how to combine with bonds? And crowdfunding?
• Capital Markets Instruments
• Private Equity funds
• Mezzanine funds
• Corporate bonds (high-yield, blue chip). Prospectus directive changes helps SME’s
• IPO’s (privatization, private companies)
• Key challenges: low exit potential for investors, liquidity, trust
• New growth capital instruments
• Crowdfunding, Peer-to-peer
• ICO?
• Key challenges: listing, trust

23. „Public Offerings“
2018
„Prospectus Directive“
„Strong institutional demand“ „Privatizations“

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