The Latvian Cabinet of Ministers has received a report from the Ministry of Finance on the release of state and municipal capital associations for an initial public offer, according to information published on the Latvian Legislation portal.
The ministry notes that the current level of capitalisation of the Latvian market is very low – around 2% of GDP. This is why the it is the government’s objective to achieve market capitalisation of the Latvian market of 9-10% of GDP during this Saeima’s term. In order to approach this level, it is necessary for all sides involved in the Latvian capital market to participate.
The report “On State and Municipal Capital Companies to be Released for Initial Public Offer” is confidential and is not publicly accessible.
Previously the ministry reported that the institution will maintain commercial secrecy when it comes to the release of shares of state capital companies on the capital market.
The ministry explains that the report is confidential because is contains commercial secrets in relation to capital companies’ preparations for the upcoming public offer.
The ministry’s representatives say that every capital company has its own, unique situation, and it is necessary to determine a gradual preparation path several years long. The ministry will act, respecting the commercial secret regarding the preparation of capital companies for the initial public offering, as well as will inform the company as much as possible about the decisions.
Previously, Minister of Finance Arvils Ašeradens said this is not just about the release of shares of Latvian national airBaltic airline on the stock exchange, but also the possibility of releasing shares and bonds of other companies.
Currently the government considers releasing shares of LMT and Tet, Latvenergo’s green energy subsidiary Latvian Wind Parks, as well as Riga municipal companies Rīgas namu pārvaldnieks, Rīgas ūdens and Rīgas siltums on the stock market.
Last year the Ministry of Finance reviewed a report that mentioned how it is planned to increase market capitalisation from 3% to 9% of GDP by the year 2027.
The report mentions that when it comes to the capital market, Latvia is among countries in which capital market development has great potential. Judging by market capitalisation in comparison to GDP, Latvia is at the very tail end of the European Union and far behind its neighbours.
In 2021, the stock market capitalisation in Latvia amounted to EUR 986 million, in Lithuania – EUR 5.167 billion, and in Estonia – EUR 5.337 billion, while in 2022, the stock capitalization in Latvia decreased to EUR 737 million, in Lithuania – to EUR 4.752 billion, and in Estonia – to EUR 4.708 billion.
The report mentions that in 2021 stock market capitalisation in Latvia was at only 3% of GDP, whereas in Lithuania it was 9.3% and in Estonia it was 17.4%. The average capitalisation index in the European Union was 54% of GDP in 2021.
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