Liquidity problems of Polish companies caused by the coronavirus pandemic attract more and more attention of foreign specialty finance funds, which offer non-standard forms of financing in situations when the existence of a company is at risk, experts from the consulting company Saski Partners believe.
Specialized funds have been operating on the European and American market for many years, offering private sources of financing, such as structured debt financing, mezzanine financing, loans converted into shares or working capital financing. Although the Polish economy, recognized as a mature market, has been on the radar of these institutions for several years, there have been few transactions of this type so far.
“Our talks with investors show that the domestic market is increasingly being watched by specialized funds offering companies access to capital in the form of various types of debt and hybrid financing combining the features of debt and equity financing,” Dominik Olszewski, managing partner of Saski Partners in Warsaw, said.
There have been several non-standard financing transactions in recent weeks. In mid-March, the American HPS Investment Partners fund, specializing in debt financing, granted a special rescue loan that faced the liquidity problems of the Pizza Express restaurant chain. The loan will have priority over other debt in the event of the company's insolvency. On the other hand, the Cinven, CPPIB and EQT funds, which until now have invested mainly in equity, decided to support their portfolio company Hotelbeds with a loan of €400 million to help it survive.
"These types of capital sources are very flexible and allow adjusting the structure to a specific situation, to secure the risk of the financing entity on the one hand, while providing it with an adequate rate of return, and on the other hand to adapt the profile of financial flows of a given financing structure to the needs and financial capabilities of the company," Olszewski added.
According to Saski experts, the attention of these investors will focus on companies most affected by the closure of the economy in industries such as tourism, retail, services and transport. Most often, these companies were not prepared for a sudden liquidity disorder because they were in a phase of dynamic growth and expansion abroad.