Grannenfelt Finance advises SMEs and growth companies on fundraising, mergers and acquisitions and financing related issues. In our seven-year history, we have completed transactions worth more than €800 million. We always seek to combine public and private financing to optimise the funding terms for our clients
At this point in the year, it is good to take a brief look back to 2022 as well as look at what the coming year is expected to bring.
The world around us
Expectations for the future have changed. Geopolitical instability in Europe, persistent inflation, rising interest rates and expectations of an economic slowdown are creating uncertainty about the general economic outlook. The market situation is also strongly reflected – even highlighted – in access to finance for SMEs and growth companies.
Pre-2022, company valuations were long at unprecedented high levels – in particular in the case of technology growth companies pricing in expectations of profitability growth and market dominance. Now, however, historically high valuations have come off substantially.
We see an increasing disparity across different industries in access to finance and funding terms. The focus has shifted from growth-seeking to ensuring profitability. A preference for so called “value companies” is back.
Despite the change in market sentiment, we managed to close our client projects successfully this year. Our turnover grew for the seventh consecutive year. Our services included equity and debt financing rounds, M&A transactions, and subsidised loans, strategic consulting as well as assisting our clients with support functions related to all these financial instruments.
What will 2023 bring?
SMEs and growth companies, whose business is focused on solving societal challenges, will continue to see strong growth fundamentals despite the challenging market. In particular, green transition, circular economy and social responsibility projects will be particularly sought-after investment targets amongst ever picker investors. The risk-reward trade off favours companies able to deliver real impact.
The role of the advisor is highlighted in a tough market environment, and in new markets such as the areas of green transition and circular economy. Projects in these sectors require larger amounts of funding and are often CAPEX intensive. Many growth-stage investors are alienated from CAPEX projects, and these do not fit the mandate of many investors. This leads to more complex financing packages and often the package is a combination of several different instruments: subsidy, debt as well as equity.
Grannenfelt Finance is well positioned to assist in fundraising for these kinds of projects due to our experience in these areas and ability to combine public finance with private finance. Typically, green transition projects need public funding to support growth due to technology and/or market risk and the large investments required in earlier stages of the business.
On the positive side, there is still liquidity in the market and funds have both the capacity and the willingness to make new investments. Never waste a good crisis, they say. Investors are known to make their best investments in bear markets, but the focus has shifted to profitability. This offers opportunities for many SMEs and growth companies and will be strongly emphasised in Grannenfelt Finance's business.
We would like to thank our customers and partners for the past year and wish them success in the new year 2023!
-The team at Grannenfelt Finance
