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In September 2010, Dürr AG was one of the pioneers that issued corporate bonds via Boerse Stuttgart’s Bondm trading segment. Today, just a year later, almost one in four medium-sized companies is planning to issue a bond. This was the conclusion of a recent survey on financing of medium companies in Germany produced by consultants Seidenschwarz & Comp. GmbH together with Prof Dr Burkhard Pedell of Stuttgart University and presented at a media conference. Among the guest speakers at the ‘1 Jahr Bondm’ (one year of Bondm) event were former German Economics Minister Michael Glos and Peter Hofelich, SME Commissioner for the Federal State Government of Baden-Wuerttemberg.
The survey highlights the importance of alternative financing models for Germany’s segment for medium-sized companies. At 83 percent, a large majority were convinced that corporate bonds in particular will become even more attractive. In the view of respondents, corporate bonds, inter alia, give them more independence from banks, greater financing security and a more balanced investor structure. According to the companies, the principal reasons for issuing a bond are to finance growth and acquisitions and as follow-up financing. Of those medium-sized enterprises surveyed, 15 percent have already made use of corporate bonds in the last three years. Without exception, these companies view corporate bonds as either positive or very positive alternative financing models.
“The respondents believe corporate bonds have a definite role to play in their future planning,” observes Prof Dr Werner Seidenschwarz, CEO at Seidenschwarz & Comp. GmbH. Traditionally, German medium-sized companies are strongly focussed on more traditional financing models, as the survey demonstrates. As Prof Seidenschwarz puts it, issuing a bond “allows companies to enhance their profile with investors and potential customers as ‘an additional plus’”.
For 74 percent of those surveyed, achieving a broad investor base and in particular attracting retail investors are either positive or very positive outcomes, while 83 percent see the improved balance between retail and institutional investors as being particularly beneficial. 71 percent also expect to enhance their market profile by widening their investor base.
Gap in the market closed by innovation
“The results of this survey on financing of medium companies provide further evidence of a trend we have seen for some time now towards greater diversification in terms of financing instruments,” says Christoph Lammersdorf, CEO at Boerse Stuttgart Holding GmbH. Boerse Stuttgart’s Bondm segment now lists 18 bonds from 16 companies with a total volume of over EUR 1.3 billion. “Not only are we a pioneer of a concept that has now been taken up by other stock exchanges; we have also established ourselves as the market leader,” he points out. The same goes, he adds, for the secondary market. “We have a market share of around 80 percent in trading of bonds issued by medium-sized companies and of over 70 percent in stock exchange-based trading in corporate bonds as a whole.”
German MP and former Economics Minister Michael Glos underlined some special features of the country’s segment for medium-sized companies. “The success of medium-sized enterprises in particular is dependent on planning security. To this end, I believe it makes good sense to create a more differentiated financing structure. Bonds issued by medium-sized companies are one of the new options available.” Peter Hofelich, SME Commissioner for the Federal State Government of Baden-Wuerttemberg, highlighted the pioneering role played by Stuttgart with its Bondm trading segment. “I would like to express my particular gratitude to Boerse Stuttgart, as the market leader, for being the first stock exchange in Germany to take note of the financing problems of our solid and productive medium-sized enterprises and for providing corresponding solutions.”
Round table attracts prominent speakers
The round table at Boerse Stuttgart’s ‘Mittelstandstag’ (day of medium-sized enterprises) was attended by a number of prominent experts: alongside Michael Glos were Johannes Führ from Johannes Führ Asset Management GmbH; Claus Döring, Editor-in-Chief of Börsen-Zeitung; Dr Ralf Herkenhoff, CFO at Läpple AG; Eberhard Reiff, Managing Partner and Chairperson of the Executive Board at REIFF Group; and Ralph Danielski, Deputy CEO of the Management Board at Boerse Stuttgart Holding GmbH. The round table was moderated by Dr Bernhard Jünemann, Editor-in-Chief and Member of the Management Board at Deutsches Anleger Fernsehen (DAF).
Survey details
The first phase (January-June 2011) was based on questionnaires sent out to medium-sized companies in different sectors. Initially, 187 companies were selected from the Hoppenstedt database on the basis of size and postcode, and then contacted by telephone. They then received a questionnaire. Fifty-two of these were returned and suitable for analysis. In the second phase, the results of the questionnaire were discussed and analysed in further detail with selected respondents in interviews lasting between an hour and an hour and a half.
