2023-06-16 09:56:13
Friday, June 16, 2023, 00:27
The 2008 crisis showed small and medium-sized companies how dangerous it is to depend on a single source of financing. Almost from one day to the next, the banks closed the credit tap and many had to resort to new formulas and markets for them in search of the funds they needed. Sometimes, and for more ‘inri’, in order to refinance your bank debt and avoid bankruptcy. They had just learned the hard way what the so-called alternative financing was, which encompasses solutions such as issuing bonds and promissory notes or accepting direct loans from investment funds so that companies could diversify their sources of financing and reduce their dependence on traditional banking. “Financing is always there. Today what is still left over is precisely financing, but it is necessary to know where it is; who is willing to contribute it”, assured José Luis Acea, Banca March’s CEO, emphatically, to the more than a hundred SME managers who attended yesterday the forum ‘Alternative financing for companies and patrimonial advice for entrepreneurs’, organized at the Bilbao Society by Banca March together with EL CORREO.
In a round table moderated by the newspaper’s economic correspondent, Manu Alvarez, the attendees had the opportunity to see first-hand the success stories of four Basque firms that have already resorted to one of these formulas: CIE Automotive, Tubacex, Elecnor and Sidenor.
Elecnor
«Funding must be requested when it is not needed. It costs less in every way”
diversify funds
The latter registered its first promissory note program for an amount of 25 million euros in the Alternative Fixed Income Market (MARF) in 2019. «We wanted to diversify the sources from which we were going to try to obtain the funds we needed to launch the business project that we had in mind three years before, when the management team bought the company. Ours is a very cyclical activity and we had to avoid the risk that we would have to pay everything back at a moment that was bad for us and, as we were also interested in getting closer to institutional investors, this seemed to us the easiest and most elective way to achieve it. », explained Sara Jainaga, member of the financial team of the industrial group and responsible for that program.
“Calling it alternative financing…”, ironized Guillermo Ruiz-Logarte, financial manager of the Tubacex group, one of the pioneers in going to the MARF promissory note market, in which it has been present since 2014. “When you talk about 200 million, alternatively nothing. For this reason, in addition to the tools, it is necessary to diversify the origin of the funds. If you internationalize the commercial and productive base, the logical thing is that you also internationalize that of fundraising. But in any case it is fundamental to have a consistent and constant message and to offer the same information to everyone”, he recommended.
Tubacex
“In addition to the tools, the geographical origin of the funds must be diversified”
A good example of this geographic diversification is CIE Automotive, which has a promissory note program registered with the Irish Stock Exchange. «In 2018 there was excess liquidity that allowed us to access financing with negative liquidity issues and we decided that our base could not only be national, that going abroad was also going to give us visibility. It worked for us and it continues to work for us, but it should also be noted that it is important to know which instrument is the best for each cycle. For this reason, although at a given moment we could consider a capital increase, right now we still have a long way to go as we are,” summarized Irache Pardo, the group’s financial manager.
“Times are very important because, in addition to market conditions or the needs of the company, internally it is necessary to make it very clear what role these instruments play and why they are used,” added Álvaro González, head of Market of Capitals of Elecnor, which last week presented a new program of multi-currency promissory notes with a limit of 400 million euros at the MARF. «In addition, although it seems silly, it must not be forgotten that financing must be requested when you do not need it. It will cost you less to get it in every way,” he added.
Coinciding with them, José Manuel Arcenegui, general director of Banca March and head of its corporate banking area, qualified that, in his opinion, a company that seeks to finance a debt “of around 200 or 300 million” can now consider using this model and emphasized “the need to understand it as something complementary to the traditional and not exclusive with respect to traditional banking.”
CIE Automotive
“At all times there is a financing instrument more appropriate than another”
efficient banking system
«We have a very efficient banking system, but when we need financing, it cannot be enough to go to it because the economy, the company and the banks themselves go through very different moments, some of great uncertainty. The good thing about capital markets is that there is always an investor. The price at which we obtain financing can vary and be better or worse, but the investment community is always there and good companies always like it », he stressed.
The session ended with the intervention of Gonzalo Gómez Retuerto, general director of the Alternative Fixed Income Market, who explained that, since its foundation in 2013, the MARF has had the mission of “facilitating both access to new financing and the launching process of a promissory note program can be completed in weeks.”
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Jose Luis Acea
CEO of Banca March“Quality and size are not mutually exclusive, but they do not always go hand in hand”
In Spain there are only two financial entities that still fully belong to the founding family. One is Banca March, which in 2026 will celebrate a century of life. It will do so under the control of the fourth generation and totally devoted to the search for financing solutions tailored to companies. «To explain our essence we must say what we are not. We are not a general entity with specialized units and we are not obsessed with size. Quality and size are not at odds, but they do not always go hand in hand”, Acea stressed, winking at an audience made up of prominent companies.
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John Bonet
Director of Market Strategy and Consulting at Banca March«The FED and the ECB will have to gauge the damage caused by rate hikes»
The forum began with an analysis of the immediate consequences of the latest decisions on interest rates taken by the Federal Reserve – which, after ten increases in 15 months, has decided to keep them between 5% and 5.25% for now – and the ECB, which instead yesterday again opted to raise the price of money by 0.25%, until placing it at 4%. “Both will have to gauge the damage that this monetary policy has done to the economy, which has proven resilient because there was a strong excess of savings generated during the pandemic. Of course, higher rates and business results that, at best, will be stable, do not seem the best allies for those seeking financing, “explained Bonet.
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