Proventus increases its focus on development capital
February 2, 2009
Daniel Sachs, CEO of Proventus, explains why Proventus is developing its lending and financing operations for medium-sized enterprises in an interview published in the Swedish business daily Dagens Industri on 2 February 2009.
The Dagens Industri article is translated from Swedish below:
Breaking new ground. New deal from Proventus – loans to Swedish companies under pressure
The Investment company Proventus has an equity of 4,000 mSEK and can be the salvation of Swedish companies that are finding it difficult to obtain bank loans. Proventus plans to develop its lending and financing operations for medium-sized enterprises.
”We face several years of major financing and restructuring needs in the global business world. The Swedish market is no exception. We see opportunities to be proactive and increase investments on the bond market. We see good return opportunities there”, says Daniel Sachs, CEO of financier Robert Weil’s investment company Proventus.
Last week, Daniel Sachs was in Davos, Switzerland attending the World Economic Forum, WEF, having been invited as member of Young Global Leaders, the WEF forum for significant people aged under 40, enabling meetings with other young leaders. An initiative on the Swedish bond market is a totally groundbreaking project.
”We want to help drive development. The bond market is underdeveloped in Sweden. There is limited knowledge, and corporate governance on this market also needs to develop. Proventus wants a chance to be active in both development and restructuring scenarios, and to be able to work closely with management and owners through different financial solutions”, says Daniel Sachs.
No to shareholding
How much of Proventus’ 4,000 mSEK equity that is to be earmarked for corporate loans is something that Daniel Sachs does not care to disclose. But according to him, it is not a question of “trifling sums”, and that Proventus is hoping to make investments together with partners.
”This is going to be the main focus for our investment operations in future. We normally target companies with sales of between 500 mSEK and 5,000 mSEK. But larger companies may also receive loans”, says Daniel Sachs.
He describes the stock market as ‘not an alternative’. ”Because of the considerable uncertainty in the real economy, we see difficulties in forming a clear approach to share valuation, and this uncertainty will remain for a long time to come.”
Predicted the crisis
The business idea seems to have come at the right moment. The European bond market was a fifth the size of that in the USA even before the financial crisis spread here. And the credit shortage has been the major topic in Davos during the past week.
Besides that, Daniel Sachs has been successful in reading the trends. In the annual report for 2007 he wrote that there was a major risk that a financial institute would run into a liquidity crisis.
Half a year later, Lehman Brothers filed for bankruptcy. Daniel Sachs considers that most debates have been too myopic in their analysis of the economic crisis. According to him, most people, including those in Davos, seem to rely on myths that simplify the analysis of the world economy over recent years.
”One such myth is that we are experiencing a financial crisis that has spread to the real economy. The causality is however more complex. What we are experiencing is a number of structural problems that are now becoming visible. They have been present in the real economy but have long been concealed through excessively liquid financial markets, excessive borrowing and a low price on risk.”
”Another myth is that the downturn is cyclic by nature and that a recovery will come along in a few years. What we see is in fact a structural change brought about by 20 years of over-consumption.
The question is not when the tide will turn; it is rather what the new structural situation is going to look like”, says Daniel Sachs.