Newsletter 1/2023 helps you secure financing in 2023

Our first newsletter of the year contains 1) our outlook for SME & corporate funding access in 2023, 2) an overview of selected customers we supported in 2022, 3) the recently published Energy grants, 4) our upcoming webinar on Green transition funding together with Danske Bank 9th of May 2023, and 5) a selection of funding tips we have shared in recent months. 

1. Updated outlook for 2023: Entering a valley of low access to funding but with pockets of opportunity 

We see the biggest funding opportunities for our customers in alternative debt, growth equity, and public finance initiatives. 
 
We expect the market turmoil in the banking sector together with the interest rate environment to decrease access to funding for companies in general. Banks are likely to tighten their credit risk policy from here on out and this further decreases access to funding. At the same time, cost of funding increases.

The increased expectations of a “hard landing” in the economy – i.e., risk of economic slowdown or recession – will further limit risk appetite across financiers and investors. This is in addition to changes in investor appetite and cost of funding that we already saw last year.  Throughout 2022 as interest rates and inflation came up, market valuations came down and recession fears were looming – access to funding was tightened. This had particularly notable consequences for companies that were raising equity. Now the credit market has tightened up as well. 

The increased cost of funding means that companies face a higher requirement on expected internal return for new investments. Weakened economic growth prospects speak for a focus on profitability rather than growth prospects. This we saw already in 2022 and the outlook remains the same. The interest rate environment further speaks for decreasing valuations in 2023. 

We see the biggest funding opportunities for our customers in alternative debt, growth equity, and public finance initiatives. This decreases the need for dilutive equity. Most importantly, it allows for more time until the next funding round. As the banking sector restricts lending due to regulatory or public market sentiment, the private debt market can fill the gap as it has seen historically large allocations. On the equity fundraising side, allocations remain strong for green transition and impact investments. Green transition and sustainability projects will in 2023 also become increasingly in focus for bank and private debt lending.   

Grannenfelt Finance builds funding structure solutions that support the long-term success and growth of our clients. We are a modern and agile corporate finance and capital raising advisor for SME and growth companies. We are industry agnostics but have deep understanding in green transition and sustainability, industrial technology, digital, consumer, and property and real estate related projects.
 
Do not hesitate to be in touch and we will help you assess the best funding opportunities for your business. Our contact details can be found here 

2. Selected client cases: A look back at 2022 

Grannenfelt Finance had a strong 2022 as we successfully executed our client projects: 

We fundraised debt or equity for eight customers, secured public funding (including investment grants) for five customers, and two real estate transactions. In addition, we have supported our clients with M&A, valuation opinions, restructurings, and other strategic or corporate finance related projects. 

3. Upcoming Public Energy grants 

1.  On March 15th, Business Finland opened the 2023 energy aid call for applications. Funding can be granted for investments and the preparations for projects that promote the production and use of renewable energy, energy saving, more efficient production or utilization of energy, or otherwise contribute to a low-carbon energy system in the long term. The grant is typically 15-30% of investment cost or up to 50% for preparatory work. 
    
   Read more about the program & eligibility here 
    

2. The Finnish Sustainable Growth and RRF-programs second call for energy investment grants is open from 15.3.-26.5.2023. Funding is available for: 1) Energy infrastructure investments (budget EUR 61.6 million), and 2) Direct electrification and low carbonisation of industrial processes. Deadline for applications is 26th May 2023. 
    
   More information about the grant 
    
   The Ministry on Economic Affairs and Employment (TEM) will publish its call for large demo projects later this spring and the application deadline is expected for early fall. 
    
   More detailed information about both of the grant calls will be shared next week. In the meantime, do contact us if you have any questions. Team contact details can be found here. 

4. Save the date: Webinar on Green transition funding in the SME sector, 9th of May 2023 

Grannenfelt Finance and Danske Bank are organizing a webinar on green transition funding for the SME sector on the 9th of May 2023. More information will be shared with our customers and on Linkedin in mid-April. 
 
Webinar agenda includes a view on green transition funding in Finland, EU and public funding opportunities, and future technological solutions that support the green transition. 
 
The organisers 
Danske Bank is one of the largest banks in Finland and supports SMEs with loans for green transition projects. Varma is one of the largest pension insurance companies and institutional investors in green transition projects. 
 
Grannenfelt Finance advises SMEs and growth companies on growth funding and is specialized in securing private and public funding for green transition or other first-of-a-kind projects. 

5. Recent funding tips 

In case you missed them, below some of the monthly SME funding tips from the last few months: 

• Finnvera has launched a new export credit instrument. Up to 20 M€ loan can be granted to international customers of Finnish companies. 

• Things to consider when fundraising in the current market environment 

• The EU offers growth loans 10-50M€ for first-of-a-kind impact projects that target decarbonisation of heavy industry, energy or transport sector solution, and Circularity & bioeconomy 

• Typical terms for alternative debt providers of ca 0,5-30 M€ loan facilities 

Contact

If you would like to discuss about financing for your company or portfolio company, please feel free to contact our experts. You can find our team's contact details here.

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