May 22, 2014

CIFA welcomes EBRD decision to commence operations in Cyprus

The agreement with EBRD is a positive development for the Cyprus real economy. On the one hand it will provide financing to the businesses and on the other hand it will enhance confidence and efficiency in the local businesses. According to the EBRD announcement, they will be engaged in the financial sector, the restructuring of the small – medium size companies and the privatisation plan.
EBRD has very similar procedures to equity funds. Before deciding its investment strategy all available information is analyzed by professionals. They request detailed business plans and all the relevant supporting documentation. They assess the assumptions made and the potential of the investment. Additionally, once the investment is made the performance is monitored within specific time interval and where the progress is not in accordance to business plans, corrective measures are taken. These actions secure the investment, the viability and the profitability of the project while it enhances efficiencies. They also add expertise from abroad.
Collective investment schemes can provide an alternative to banking financing, especially during this period where the financial institutions cannot finance new projects and the real economy. Such schemes provide security to the investor since they are licensed and monitored by the Cyprus Securities Commission, while it gives the opportunity to the investors to diversify their risk. Actually such a scheme was used in acquiring a highly reputable entity during the privatization procedure in Greece.
CIFA has proposed the creation of the Cyprus Economic Growth Fund which will be administered by high caliber professionals that will analyse investment proposal and monitor their implementation. This fund can attract foreign investors who believe in the Cyprus Recovery Story but they do not want o invest in a specific project while it can be also finance through European funds.
Additionally we believe that Collective Investment Schemes are an appropriate vehicle for commercially developing governmental property. Such action is also required by the Memorandum of Understanding and it will give the ability to the Government to improve its financial performance.