Signet Bank acted as the arranger, helping Latvia’s largest company, wholesaler of IT products and consumer electronics ELKO Group to successfully issue bonds in the amount of EUR 20 million.
The bonds were issued on February 12, with the issue size of EUR 20 million, maturity of 5 years and a coupon rate of 6%. More than 80 investors from the Baltics States, Germany, and Malta participated in the issue, including banks, pension plans, investment funds, insurance companies, as well as private investors. The total demand for the bonds exceeded EUR 50 million. AIF “Altum Kapitāla Fonds” (Altum Investment fund) also participated as an investor, and the bonds were the Fund’s first investment.
The bond issue is an opportunity for our company to continue to grow and remain competitive even during the pandemic. Demand for IT and consumer electronics has increased rapidly, while there is high uncertainty associated with supply chain disruptions and increased logistics costs. To manage large and rapid growth in a challenging market environment, it is crucial to ensure a sufficient level of working capital.”
Svens Dinsdorfs, CEO of ELKO Group
The return of ELKO to the Baltic capital market is a significant event in the industry. The issue was 2.5 times oversubscribed, and 96% of the bonds were purchased by domestic investors. The success of this bond issue clearly demonstrates that bond issuance in the local capital market can be an effective tool for Latvian companies to raise funds for development. We hope that this issue will also encourage other companies to consider bonds as an alternative source of financing.”
Roberts Idelsons, CEO of Signet Bank
The investment and advisory company Callidus Capital also participated in the transaction as a financial adviser to the issuer.
The issue was arranged in a relatively short time, and the demand for ELKO bonds significantly exceeded the issue size. We are glad to see such activity among market participants, especially from local banks and private investors. To promote economic growth and development, the money must be in motion and meaningfully invested!”
Roberts Stuģis, partner at Callidus Capital
We are pleased to participate in the issue of ELKO bonds as one of the largest investors, supporting the growth of the industry champion at a time when the pandemic has significantly changed the playing field of exporting companies. This is the objective of ALTUM Investment Fund – to provide meaningful support to large enterprises in Latvia that use the Covid-19 crisis as a time of opportunity, strengthening both their existing market position, as well as entering new markets, while diversifying their sources of funds. The Fund’s investment, consisting of public financing and money from Latvian pension plans, also helps promote private investor interest in bonds. At the same time, this investment will also generate returns for our investors and contribute to the development of the Baltic capital market.”
Reinis Bērziņš, Chairman of the Management Board at ALTUM
Bonds will be included in the Nasdaq Riga alternative market First North.
The bank was founded in 1992 as Latvijas Biznesa banka. Since 2013, it has focused its strategy on servicing entrepreneurs and their businesses, with an emphasis on high-quality capital maintenance and structured investment projects. Signet Bank’s majority shareholders are a group of Latvian and international investors, which includes SIA Hansalink, SIA Fin.lv, and Signet Acquisition III.