Investment Projects

Business is constantly developing. Modern business needs investments. This is especially relevant for the enterprises from the real sector of economy which lose their competitive advantages without an access to the investment resources. Unfortunately, investment resource is available only for a few people, often in the volume not sufficient for the business. 

Exploring the best source of financing is a serious task. Near-term prospects of business, specifically, its competitive advantages, as well as possible risks depend on what investments are attracted. The biggest risk is a lack of control over the business. It may happen in result of a hostile takeover or because the company fails to technically fulfill its obligations before investor. This is serious and you should think of such risks exactly when the future investment project is planned.

What should you do? Should you refuse the projects which require large investments? We don't think so. There are just different financial and investment solutions for different purposes. We deal with a few methods of attracting investment. This includes project financing, establishing joint ventures and information support of IPO.

As for the project financing, we will find the best ways of raising investments for the company. In terms of financial planning it is sometimes very advantageous and appropriate to raise a credit. There are some cases when it is reasonable to raise a syndicated credit. Anyway, a credit is a risk which can be easily predicted when a borrower has a good idea of the structure of its liabilities and the schedule of debt repayment. The most important issue when raising the loan is the cost of credit. Of course, it should be minimal. In fact, market is so sensitive that it crates a natural protection against unclaimed proposals. This natural protection is a cost of financing. The more competitive the project is, the more attractive the terms of financing are. If the market doesn't need a product or a service which can provide an opportunity of raising investments, the terms of financing will the best.

Working with the credit resources it's important to make sure that business is not overstocked with credit liabilities. If there is a situation at a certain stage when there are too many credit liabilities it is necessary to revise the work with financial tools.  

Setting up joint ventures or having a share in a company is a solution for the investment projects which demand both money from investor and professional expertise. In this case, the partners make an agreement on joint contribution in the project sharing risks and future profit. We know it by experience that such projects are very interesting for institutional investors who endeavour to ensure stable and predictable profit for themselves. Basically, this is the scheme, with the share in the company's authorized capital, which is used to implement the projects associated with the infrastructure development, because modern infrastructure projects, including ports, airports, terminals, are quite difficult in terms of technologies. They require much time and substantial financial resources.

Before the crisis many companies used to recourse to such method of attracting investment into the business as IPO. IPO is an open market. Leaving the market, business obtains an opportunity to work with more investors. This is very attractive for business as IPO helps to raise large funds. However, IPO has its twists and turns. They involve risks which business has to handle.

We advise our clients to consider at least two of them:

  • The first one concerns the stock value. A company by no means always can sell its stocks for the sum it wants to when floating on a stock exchange. There can be several reasons for it, including business image, its attractiveness for an investor and even current state of the market. If the image factors can be changed by PR and advertising, the state of the market can be forecast, but it cannot be guaranteed.
  • The second one is associated with hostile takeover or redistribution of stocks among the present shareholders. Your stocks are available for everyone on the stock exchange which can make rivals use this opportunity. The risk grows in line with the volume of stocks placed on the market and the number of shareholders in the company. Buying the stocks, traded on the market, the shareholders with the minority shareholdings can increase their share in the company to the volume which enables them to take decisions in the company.   

Is it possible to increase the chances for successfully IPO? Of course, it is. But it requires investments in the business image. Preparing the clients for IPO, banks often undertake information and PR support of the project as a whole. We believe that such practice sometimes cannot meet the interests of the companies which take the decision to make an IPO. The bank's program provides little time for the investment campaign and PR. If we speak about a new market player, there is little time to form an opinion about the company, including its business and the perspectives.

Image and reputation risks and costs are a very important success factor of IPO. Meanwhile, there is a direct relationship between the market opinion about the company and IPO success. The better the market comprehends the company's business, the higher the share price is. It may be no accident that the «.com» market boomed when the market, including the philistines who invested their funds in the stocks, realized that the future was for the Internet companies. The prices in all market sectors are fixed in the same way. For example, the share price of the pharmaceutical companies go up when the market can see that certain pilot projects of pharmaceutical companies are tested and the tests are successful.  

We advise our clients to carry out the full-scale advertising and PR campaigns in the international business media and the media of the country where the company is going to make an IPO. This campaign will have its own specific feature which should tell a little bit more about the company compared to the common practice. Image advertising works more effectively to highlight corporate values, as well as tasks and challenges of business. Information campaign is meant to create image of business, meet the market with the market players. Developed countries lay high emphasis on moral business principles. They believe that it is necessary to invest in the business the moral principles of which comply with the modern view of "fair business", the business which makes the people's life better. Russia often misses the moral aspect of information campaign. This can partially explain the failures of the largest Russian companies in the international merger and takeover market. Those who follow these companies on the market, should reason from unsuccessful experience of the Russian corporations.

We believe that there are no absolutely identical investment projects. Each project is a unique one. If you need help in implementing an investment project we will be happy to discuss all possible alternatives with you.