Capital markets – an alternative for financing company growth

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Nick Calamatta and Darrin Pace.

Nowadays companies have various alternatives when it comes to raising capital to finance their growth and expansion. The Sunday Times of Malta caught up with Nick Calamatta, Co-CEO of Calamatta Cuschieri, and Darin Pace, Head of Capital Markets of the firm, who gave an overview of the pivotal role of capital markets in Malta’s growing economy.

What is the role of capital markets in Malta’s economy?

Nick Calamatta (NC): Capital markets have been around since 1992, when the Malta Stock Exchange was set up, and the country has seen a steady growth of such instruments over the last 27 years. More recently, the fast-paced growth of the Maltese economy coupled with a number of property developments have brought about an increase in the use of capital markets for the financing of such growth in the private sector.

Darin Pace (DP): The primary role of capital markets is to match the needs of organisations seeking funding with the needs of investors that have excess supply of capital ready to invest. In a growing economy you need efficient capital markets, and this was also highlighted by the European Union with the Capital Markets Union Action Plan. We have seen several local companies tapping into capital markets for financing their growth and diversification.

Why should companies seek different methods of financing, apart from that provided by banks?

DP: Traditionally the banking system has been used for the funding requirements of companies and organisations. However, capital markets have been growing steadily over the years. Bank funding and capital markets are not outright substitutes for each other, but are increasingly being seen as complementary to each other. The chances are that as a company continues to grow, it would require funding from diverse sources featuring both capital market instruments as well as bank facilities.

It is important that investors familiarise themselves with the company they are planning to invest in, and to ensure that their investment falls within their risk parameters

How is Calamatta Cuschieri growing in this sector? What services do you offer in this regard?

NC: Five years ago, we took a strategic decision to set up a capi­tal markets proposition within our organisation and, over the years, we have built a positive track record across a number of services in capital markets which have included supporting various IPO and bond issues, being a leading corporate advisory for Prospects MTF, and also providing agency services to a number of foreign issuers. Calamatta Cuschieri also acted as sponsor for the listing of funds on the official list of the MSE.

Can you mention some examples of companies – local and international – that you have assisted?

DP: Over the past years our firm has helped various businesses grow and thrive by assisting them in raising funds or listing through the capital markets. In fact, over the last four years, our capital markets team have been involved in more than 20 transactions by both local and international companies. These companies are varied in size and in the sectors they operate in, and range from real estate, hospitality and manufacturing to pharmaceutical and the retail sector.

In the past few weeks and months we have been very active in a number of main markets bond issues, such as Mercury Projects Finance plc and Endo Finance plc, as well as prospects market issues, like those of the Convenience Shop (Holding) plc, Borgo Lifestyle Finance plc and Horizon Finance plc.

What’s in it for investors investing in such instruments?

DP: As we have seen, within our local economy there are good quality companies that need capital and that are willing to offer an attractive rate-of-return for people investing in their issues. Over the years, we have seen an increase in investments being made in local companies. It is worth noting that a number of companies have managed to maintain a loyal investor base through various issues. It is important that investors familiarise themselves with the company they are planning to invest in, and to ensure that their investment falls within their risk parameters.

Apart from capital markets, Calamatta Cuschieri has been growing steadily over the years within the financial services sector. What can you tell us about the services you offer?

NC: The Calamatta Cuschieri Group has grown from strength to strength over the years. Today the Group em­ploys over 160 professionals. This was possible thanks to the fact that we established ourselves as market leaders as well as diversified our services. This has led to the expansion of the group’s business and an in­crease in our assets under management which stands at over €1 billion today.

We recently moved into our new state-of-the-art head-office in Birkirkara and we now ope­rate through six branches and a strong online proposition. We have also been diversifying our financial services propositions which now also include life insurance, pensions and fintech services, in addition to investment advice, live online trading, savings plans and wealth management, fund ser­vices, software development and marketing services.

We are able to provide a ser­vice to all segments of the market – from the small saver to high net worth individuals, from the private investor to the corporate segment. Our goal is to attract the very best talent and lately we have made some important high-level appointments as we continue to strengthen our management team. As we approach our 50th anniversary in 2022, we have ambitious growth plans to continue leading the financial services sector in Malta and expand internationally.