Latvia to support SMEs in entering stock exchange

More than 1.97 million euros will be available to small and medium-sized enterprises to prepare for participation in capital markets or securities trading on the stock exchange, the government decided on Tuesday, October 17.

It is intended to thus increase the international competitiveness of enterprises and promote investments in viable and innovative enterprises, allowing them to grow and develop more rapidly.

The Ministry of Economics has predicted that companies could be able to attract at least an additional EUR 5 million in capital markets, but previous experience shows that the benefits could also be higher, Economics Minister Viktors Valainis (Union of Greens and Farmers) said.

By the end of 2029, it is planned to support at least 10 companies and attract private funding of up to EUR 2 million.

“This [aid] is mainly for “paper works.” Companies face high costs to sign up to the stock exchange, especially for small and medium-sized businesses. We foresee state aid to prepare these necessary documents,” Valainis explained, adding that one company's expenses can amount to up to half a million euros. 

Prime Minister Evika Siliņa (New Unity) said that the government would move the Riga Stock Exchange in this way: “While it's European funding, it would move our stock exchange to attract more companies willing to work with their shares and securities in this way.”

The proposal of Ministry of Economics foresees support of EUR 1.974 million for the participation of small and medium-sized enterprises in the capital market. Of this amount, the European Regional Development Fund (ERDF) has a funding of EUR 1.678 million, while the State budget has a funding of EUR 296,085. The maximum amount of ERDF funding shall not exceed 85% of the total eligible funding of the project.

Preliminary estimates show that the total funding from 2024 to 2028 is planned to be EUR 300,000 per year, while in 2029 – EUR 473,896.

The Ministry of Economics emphasized that Latvia is among those countries where there is still great potential for capital market development. According to the market capitalization of shares against gross domestic product (GDP), Latvia is the last place in the European Union, lagging significantly behind neighboring countries.

“Private investment accounts for only 17% of GDP, while the target should be at least 23-25% of GDP. This shows that Latvia's stock market in development is significantly lagging behind its potential, which would be appropriate for the level of development of our economy,“ the Ministry said.

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