Estonia, Financial Services, Investments, Markets and Companies

Deputy secretary general for financial policy and external relations at the Estonian Finance Ministry, Marten Ross, said that the work done will form a fertile soil for putting into place a long-term plan for developing the Estonian capital market. "An ailing capital market will leave a visible mark on the fate of the entire economy. The Estonian capital market with its small size has been in the role of an orphan for an undeservedly long time, which is why the solving of every single problem should now be treated with all seriousness," Ross said.

The conclusions of the study suggest encouraging the listing of private and state companies. It is necessary at that to dispel fears concerning listing, to train the participants and one option would be that the state cover up to half of the expenses related to initial public offerings (IPOs) of shares.

The offering of listed shares should be broadened to foremost create new investment possibilities for local pension funds, which otherwise would be forced to invest abroad due to limited liquidity and few alternatives.

Considering the current scarce opportunities, the access of small and medium sized companies to the capital market must be improved and expenses accompanying the involvement of capital must be reduced. This, in turn, would create new exit possibilities for private equity and venture capital funds dealing with small and medium sized enterprises. Alternative financing platforms like crowdfunding would alleviate the same problem and would also make investment possibilities more diverse, the analysis said.

The diagnostic project was compiled by consultation company Civitta and law office Sorainen, which from early spring carried out more than 40 interviews and two workshops with market participants. In addition, existing data concerning the capital market, market statistics and the legal and regulatory frameworked were worked through.

The Estonian capital market diagnostic project was carried out a year after the Baltic finance ministers in cooperation with the European Band for Reconstruction and Development (EBRD) and the European Commission's Structural Reform Support Service (SRSS) project signed a cooperation agreement between finance ministries to develop a regional capital market. The next steps of the joint cooperation will be published at a Baltic capital markets conference to be held in London on October 18.

The Estonian capital market diagnostic project was funded by the European Union through a structural reform support service program and it was helped along by the European Commission's Structural Reform Support Service (SRSS) and the European Band for Reconstruction and Development (EBRD).