Private equity could help struggling SMEs grow: CSX
Small and medium enterprises struggling to raise capital should consider private equity, said a senior official at the Cambodia Securities Exchange (CSX).
Hong Sok Hour, CEO of the Cambodia Securities Exchange (CSX), emphasized the important role private equity funds can play in providing much-needed liquidity to companies, particularly those struggling to raise capital through traditional means such as initial public offerings (IPOs). Speaking to approximately 100 entrepreneurs and business owners during a seminar, Mr. Sok Hour noted that many local companies require capital to expand their businesses but face challenges in securing funds. He mentioned that CSX is offering training to help entrepreneurs understand private equity investment as a viable alternative.
One of the key advantages of private equity, according to Mr. Sok Hour, is that it offers SMEs not only funding but also access to expert business advice. He encouraged entrepreneurs to consider this investment method as it can be a highly effective way to grow their businesses. He also outlined that private investment funds are typically divided into two categories: private equity firms and venture capital firms.
Pech Bolen, president of Westline Education Group, highlighted that private equity and venture capital funds are among the best options for SMEs seeking growth and competitiveness. He emphasized that such investments help companies improve transparency, governance, and business strategies, which can ultimately lead to solid growth. Bolen also pointed out that over $300 million is currently available to local enterprises through private equity funds. However, he noted that many Cambodian SMEs are not yet ready to benefit from these funds due to their small size or poor record-keeping practices, which often deter investors.
Kem Bora, a partner at Mekong Strategic Partners, a firm specializing in investment management and advisory services in the Greater Mekong Subregion, explained that private equity investors typically look for companies that are adaptable to change and have solid financial records. Investors also assess the terms of existing shareholder agreements, financial projections, sensitivity analysis, and valuations when considering potential investments.
The seminar underscored the growing interest in private equity as a key source of capital and expertise for SMEs in Cambodia, as well as the challenges that many local businesses face in preparing for such investments.