Businesses in the region to benefit from European Bank investment

Businesses in the region to benefit from European Bank investment

Small- and medium-sized enterprises in the Western Balkans will get a new chance for development with an investment from the European Bank for Reconstruction and Development.

Small- and medium-sized enterprises (SMEs) in the Western Balkans, which according to economists are the pillar of the economy, will get a new chance for development with an investment from the European Bank for Reconstruction and Development.

A 77-million euro tranche will come from the bank's Enterprise Expansion Fund and will finance SMEs in Serbia, Kosovo, Macedonia, Bosnia and Herzegovina (BiH) and Montenegro.

"The fund has been created for investing in companies with high growth potential in all areas. In Serbia, firms from the agricultural sector are particularly of interest, as are those from the production and IT sectors," said Matteo Patrone, the bank's director for Serbia.

By investing money, the fund will become the owner of 25-30 percent of shares in the SMEs, will partake in making of strategic decisions, and will then sell its stake in three to seven years.

Access to finance is seen as a significant obstacle to growth and development for small and medium-sized businesses in the Western Balkans, and the problem has been further accentuated by the global financial crisis.

"In general, local companies only have access to debt financing from local commercial banks. Others sources of financing, notably private equity, are extremely scarce. Yet in many cases, such sources are exactly what are required by companies experiencing or having the potential to achieve fast growth, but having a limited asset base against which to borrow. The fund will tackle this...