Capital markets and SME financing: now a really good match

For numerous SMEs, direct access to institutional investors has emerged as a viable alternative to traditional financing through their primary banks. “However, these direct investments have frequently encountered obstacles due to their complex structure”, notes Daniel Knoblach, General Manager of Super Global GmbH. To address these shortcomings, Super Global GmbH is introducing a new fund designed to bridge the gap between SMEs and institutional investors, thereby reducing costs and streamlining the investment process.

SMEs are seeking alternatives or additions to financing from their primary banks. “The problem is not just rising interest rates”, explains Knoblach. “Bank regulations often restrict the granting of new loans to the extent needed.” Regardless of the companies’ creditworthiness, this limitation is due to increased capital requirements imposed on banks, which curtail their lending capacity.

Conversely, numerous SMEs have reservations or lack the experience to access the capital market through issuing their own bonds. “This is a corporate financing method frequently favoured by large corporations”, remarks Dr Oliver Decker, Head of Financial Services – Legal at Grant Thornton Rechtsanwaltsgesellschaft and Supervisory Board member at Super Global. Specifically, the costs involved in entering the capital market often deter many SMEs.

free & non-binding

Institutional investors exhibit a notably high demand for corporate loans as an asset class. “The default rates for these loans are low, and they frequently offer yields that surpass those of government bonds or large corporate bonds”, explains Dr Decker. In addition, corporate loans provide beneficial diversification within investment portfolios.

The fund created by Super Global, launched as a German special fund and thus exclusively available to institutional investors, bridges the gap between these two worlds. “The fund gathers capital from institutional investors and channels it as loans to businesses, predominantly within the SME sector”, Knoblach explains. “Alternatively, there is the option to issue a bond, which would then be exclusively acquired by the fund.”

Super Global GmbH serves as the capital management firm for the fund. “We also provide advice and assistance to SMEs that are considering bond issuance”, Knoblach states. “This approach facilitates entry into the capital market with minimal effort and manageable costs.” With all services consolidated under one roof, the process is not only cost-effective but also accelerates capital availability compared to traditional financing methods, such as bank loans.

“Super Global functions as a one-stop shop for corporate financing”, Dr Decker adds. “By cutting out some intermediaries, both parties benefit from the set-up.” Investors enjoy attractive returns, whereas companies gain the ability to secure financing independently of banks, benefitting from competitive rates within a regulated environment and depositable securities. “Thus, the capital market and SME financing are effectively integrated”, concludes Dr Decker.

Dr. Oliver Decker

Dr. Oliver Decker
Supervisory Board Super Global