Business environmnet should become open and safe

• Latvia

• Investment funds and asset management

01-08-2014

Interview with Māris Vainovskis

Bilances Juridiskie Padomi No.8 (14) August 2014

Foreign capital is more and more active in acquisition of Latvian companies. Will there be any large local companies left in the future at all?

There is such a tendency indeed. During the last years, there have been many more such transactions than during the four crisis years. The interest of strategic investors in Latvia and our companies is obvious, especially in the port and transit business. These are cargo owners, forwarders, stevedores. We see an impressive interest of large Russian investors which has not diminished even in the current political situation. The business people apparently believe that politics will stabilise. But local capital has been seen to become more active, too, the local capital’s ability to buy out foreign companies is on the rise.

An interesting trend can be seen in cases when local capital and foreign capital form joint ventures. Local entrepreneurs can invest infrastructure, real property, knowledge of local laws, adequacy, while foreigners can provide additional funding as well as client networks and necessary contacts which can ensure business expansion. They quite often agree on equal conditions – 50/50, in other cases foreigners are interested in obtaining controlling interest. There are also cases when foreign investors join as minority shareholders – these are usually financial investors or mezzanine lenders. We can mention Jānis Ošlejs’ Primekss as an example, in which case the foreign investor did not present a precondition of obtaining absolute control in the company.

Full article in Latvian language available here.