Source: eKapija | Monday, 05.03.2018.| 10:02
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Serbian capital market awakening – First IPO drawing closer, crowdfunding platform for startups and small companies soon

(Photo: rangizzz/
After nearly eight decades, the first Initial Public Offering (IPO), that of Fintel Energia, a daughter-company of Italy's Fintel Energia S.p.A, should finally be realized at the Belgrade Stock Exchange.

As Tiziano Giovannetti, CEO of Fintel Energia S.p.A, said recently, the company is preparing to enter the Belgrade Stock Exchange in the next two months.

Judging by earlier announcements, Fintel Energia is expected to collect around EUR 15 million, which it intends to invest in the second phase of the Kosava wind farm, with a capacity of 117 MW, as well as in other projects.

This event is being eagerly awaited in the local capital market, whose participants hope that this IPO might merely be the first of many.

– The fact that a Serbian company is to put to practice what economics students learn about in their introductory courses, which is that there are sources of finance that can be even more favorable than loans, for the first time, will, we hope, contribute a lot more to the promotion of the capital market and its positioning within the local economy – Sinisa Krneta, director of the Belgrade Stock Exchange, says for eKapija.

He emphasizes that “it is very important to have a company be the first one to forge the path of IPO in Serbia, following which local investors and other local companies will experience in practice what the capital market offers, which is the potential to increase capital and funds available to companies and investors”.

According to the estimates of the Belgrade Stock Exchange, there are investment potentials which can absorb even considerably greater needs for capital, and numerous private companies need additional capital to expand their business.

– Listing on the Stock Exchange might be a more complicated way, but certainly a useful one from many aspects, especially from the aspect of the development of the local economy, citizens' savings, the entrepreneurial mindset and the positive performances of the majority of macroeconomic indicators – Krneta explains.

Sinisa Krneta
Sinisa Krneta (Photo: YouTube/screenshot)
The presence of a new security at the Belgrade Stock Exchange should also contribute to the visibility of the Serbian capital market in the regional, but also global, financial flows.

– The IPO itself will certainly cause the turnover at the stock exchange to increase, primarily regarding the newly listed shares, but then also, we hope, other quality market materials – Krneta says and adds that “it has been proven several times so far that countries without a sufficiently developed capital market, especially shares market, pay a steep price in the form of below average national economy growth rates over a period of several years”.

For this reason, the Belgrade Stock Exchange, with the support of the European Bank for Reconstruction and Development (EBRD), started the project Serbia IPO Go, directed at promoting and aiding the realization of IPOs in the sector of private companies.

– The aim of the Serbia IPO Go project is for local companies estimated to have the biggest potential to be enabled and motivated to gather capital by making an IPO and a successive entrance to the Stock Exchange – Krneta says.

He adds that, in other transitional economies, it is usually the state that forges the path for private companies to enter the Stock Exchange, by privatizing public companies through IPOs, and explains that “the talks we've had with companies show that even those ready to enter the market do not wish to be the first ones to do so”.

On the other hand, Croatia recently marked the tenth anniversary of the listing of Hrvatski Telekom on the Zagreb Stock Exchange. Over 356 thousand citizens took part in this IPO, the biggest one in the region at the time.

Still, as the Zagreb Stock Exchange says for eKapija, the Croatian capital market has also been waiting for the announced privatization processes for a number of years now.

– Citizens' savings have been on an upswing for years, the capital is there, but what's missing is new “big” stock that might make the market more attractive as a whole – they say and remind that the latest IPOs were carried out back in 2015.

Crowdfunding platform in line with Estonian model

In addition to the plan to make big companies offer their shares to investors, the Belgrade Stock Exchange should soon offer a crowdfunding platform to the local market. The platform will act as a market for financing startups and micro, small and medium enterprises.

(Photo: kozirsky/
The partner of the Stock Exchange in this project will be one of the leading platforms of this kind in the world – the Estonian Funderbeam, recently pronounced the best Fintech company in Europe in 2017.

Unlike IPOs, this platform is primarily meant for startups and businesses which find it harder to reach the capital and which lack options for more conventional forms of financing.

As Sinisa Krneta says for eKapija, the minimum amount of capital needed for a company to list on the Stock Exchange is one million euros, along with adhering to all the requirements of reporting and corporate management, which is often too demanding even for medium companies.

– For this reason, with the use innovative technological solutions, the platform offers to smaller companies and quality business projects the possibility of being financed by professional and experienced investors, which enables the provision of advice and the transfer of knowledge from experienced business people to young entrepreneurs, in addition to the money – he explains.

The Zagreb Stock Exchange has a positive experience with this kind of cooperation. In late 2016, together with its Estonian partner, it founded Funderbeam South-East Europe, in which its ownership amounts to one fifth.

As the Zagreb Stock Exchange says for eKapija, in the first ten months of 2017 alone, over EUR 2 million was gathered from investors from all over the world through the Funderbeam SEE platform for four Croatian startups and SMEs.

– With this model of finance, the Croatian market gained a new class of property – investing in startups, and the excellent results of Funderbeam SEE in its first year of operations show that our market has a considerable potential for development of startups along with adequate financial support by investors – the Zagreb Stock Exchange says.

Although this is a risky form of investment, they add, Funderbeam SEE features the highest degree of investor protection possible and the obligation of reporting by companies following the gathering of the funds.

At last year's conference of the Belgrade Stock Exchange, one of the heads of Funderbeam, Urmas Peiker, said that the establishment of one such system often requires the harmonization of regulations in certain states.

– We base the activities of the Funderbeam SEE platform on the fact that this form of financing is not subject to the existing regulations, for which an expert opinion of the regulators was necessary, which we've obtained – the Zagreb Stock Exchange says.

When it comes to the realization of projects aiming to facilitate the financing of small and medium companies in Serbia, the Belgrade Stock Exchange says that key incentives need to come from the side of regulation and tax authorities.

– With great gratitude, above all to the National Bank of Serbia, it is my pleasure to point out that a certain set of questions related to the placement of funds and the treatment of financial accounts has already been solved, but there still remain a lot of challenges in the domain of registration procedures and the tax administration that need to be solved – Sinisa Krneta says.

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