The Impact of Public – Private Capital Leverage on the Performance of Multi-Asset Renewal Funds
Soporek, Agnieszka (2017)
Soporek, Agnieszka
Haaga-Helia ammattikorkeakoulu
2017
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2017060111740
https://urn.fi/URN:NBN:fi:amk-2017060111740
Tiivistelmä
The Research Institute of the Finnish Economy (ETLA) took on a 2.5-year project to find out how much value potential small and innovative companies in Finland have in a few particular fields. A second question followed and became the more important one, that is how to help them increase and bring value to the real economy.
The financial crisis of 2008 had a huge impact on all aspects of world economy. Access to finance, especially for small and medium-sized enterprises (SMEs), became extremely difficult and very expensive. Without it, companies cannot grow and develop their products and services, and thus economy cannot grow either. That is why a new investment vehicle was proposed – Multi-Asset Renewal Fund (MARF). MARF would invest in innovative clean-tech companies in Finland, thus supporting the real economy. However, also investing in the financial markets would make the fund more profitable, which is in the interest of investors.
The purpose of the thesis was to research how accessible financing is for SMEs, what the main sources of investment are, and how more investments into small companies and the real economy can be encouraged from the private sector by using MARF. First, the theoretical part of the research was conducted through a desktop-study. In order to understand the structure of MARF, the asset classes and risk-return profile, and guarantee schemes were introduced and explained. The empirical part of the thesis was conducted by creating multiple scenarios with variable assumptions. The calculations included the financial ratios of chosen Finnish SMEs, how much of investments they could receive according to the assumptions on their risk profile, and how high those amounts could possibly become if the guarantee was applied.
The last part of the thesis presents an analysis of the research and calculations, and discusses the research topic of the paper, that is, how public capital or involvement can catalyse private investments and influence the overall asset allocation of the fund and its performance.
As the outcome of the thesis, we can find scenarios of impact the guarantees could make on the SME Debt class and companies it is comprised of.
The financial crisis of 2008 had a huge impact on all aspects of world economy. Access to finance, especially for small and medium-sized enterprises (SMEs), became extremely difficult and very expensive. Without it, companies cannot grow and develop their products and services, and thus economy cannot grow either. That is why a new investment vehicle was proposed – Multi-Asset Renewal Fund (MARF). MARF would invest in innovative clean-tech companies in Finland, thus supporting the real economy. However, also investing in the financial markets would make the fund more profitable, which is in the interest of investors.
The purpose of the thesis was to research how accessible financing is for SMEs, what the main sources of investment are, and how more investments into small companies and the real economy can be encouraged from the private sector by using MARF. First, the theoretical part of the research was conducted through a desktop-study. In order to understand the structure of MARF, the asset classes and risk-return profile, and guarantee schemes were introduced and explained. The empirical part of the thesis was conducted by creating multiple scenarios with variable assumptions. The calculations included the financial ratios of chosen Finnish SMEs, how much of investments they could receive according to the assumptions on their risk profile, and how high those amounts could possibly become if the guarantee was applied.
The last part of the thesis presents an analysis of the research and calculations, and discusses the research topic of the paper, that is, how public capital or involvement can catalyse private investments and influence the overall asset allocation of the fund and its performance.
As the outcome of the thesis, we can find scenarios of impact the guarantees could make on the SME Debt class and companies it is comprised of.