Banks vs. PEFs--An Old Friend Better than Two New Ones?

摘要

Globally, sources of financing for business development divide into three main groups. The first group is banks and credit institutions who finance various projects through loans. The second one is institutional and private investors who invest their money in shares and bonds of well-known public companies listed on a stock exchange. And, finally, the third one is private equity funds and investment companies that take part in projects directly, i.e. through equity financing. While in developed countries all these elements supplement and balance each other, Kazakhstan in recent years leaned primarily to bank financing. According to some estimates, because of excess liquidity in second-tier banks some 97 percent of all investments in our country were made with the help of loan capital. This can be deemed one of the reasons for the Kazakh economy's 'hard landing' in 2007. Without the support of the banking 'purse', domestic companies now feel an acute shortage of money even to stay afloat, not to speak of future growth. The government's attempts to bolster the Kazakh stock market were apparently late (despite some progress in the market) and access still remains difficult for companies with low or medium capitalisation. The listing preparation process can take between six months and a year, whereas money is generally needed today.