It is planned to list minority shares of the majority of state companies, said Latvian Prime Minister Evika Siliņa at the “Powerful companies – a more capable country” forum organised by the Bank of Latvia on Wednesday, the 7th of February.
The PM noted that the ruling coalition has reached an agreement to develop the capital market. This would give Latvia an opportunity to become a stronger country. “The government’s plan to list state company shares on the exchange would be oxygen for the economy,” said Siliņa.
The PM noted it is important to perform changes to the management of state companies and delegate management duties to professionals to a larger degree.
Minister of Finance Arvils Ašeradens said the first state company to be listed on the stock exchange will be airBaltic.
He also said that public companies that do not depend on the state but work as full-fledged market companies should be listed on the stock exchange. These companies include Tet and Latvian mobile telephone. The minister also said Augstsprieguma tīkls would make a company with good capitalisation and an attractive investment destination for pension funds.
Ašeradens admits that “there is little point listing Latvenergo and Latvian State Forests joint company Latvian Wind Parks”, but Latvenergo could create Latvenergo Green as a green energy subsidiary and list that on the stock exchange.
Additionally, according to Ašeradens, Rīgas ūdens and Rīgas namu pārvaldnieks could be listed on the stock exchange. He proposed discussing a possible merge of the two companies.
He also allowed for a discussion about Tet construction subsidiary Citrus Solutions.
In Latvia, the development of the capital market requires the listing of shares of state and municipal capital companies on the stock exchange, said Bank of Latvia governor Mārtiņš Kazāks.
The head of the central bank stressed that the Russian-Ukrainian war continues for nearly two years, adding that this requires strengthening Latvia’s domestic and external security, as well as energy security and military industry. The issue of sustainable economy remains more important than ever. This will require enormous and long-term investments.
Kazāks also said it is highly important to ensure sustainable economic growth, create well-paid jobs, reduce inequality and improve the quality of life.
EU funds and state support programmes are an important source of funding and a catalyst to resolve the aforementioned challenges, but this will not be enough, admits Kazāks. He said only a comprehensively developed capital market will be able to ensure the attraction and channelling of sufficient funds for investments in companies, productivity improvement and human capital.
Kazāks mentioned that until now the banking sector has played the main role in financing the economy in the EU and Latvia in particular. It is likely this will the remain the case, but it will not be enough to secure strong economic growth.
“Bonds are a good and frequently used instrument in investment financing – they are already being used more and more safely by Latvian companies, aware of the advantages and opportunities of this instrument. The story with the stock market is not as optimistic, and its capitalisation in the interest of GDP in Latvia lags behind both neighbours and EU averages,” said Kazāks.
According to him, it should start with ambitious but relevant and achievable goals. For example, the goal set by the Latvian government last year to reach 9% of GDP capitalization of the Latvian stock market in 2027 is a good intermediate step after which further work could be done. To achieve this, a larger number of participants in the capital market is required.
In order to provide a significant breakthrough for the development of the stock market in Latvia, it is necessary to list state and municipal companies on the stock exchange, said Kazāks, adding that Latvia needs to work hard on accomplishing this goal.
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