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, CSX’s CEO, said private equity funds can play a vital role in bringing much-needed liquidity to companies that are facing difficulties raising capital through more traditional means, like initial public offerings (IPOs).
Speaking to about 100 entrepreneurs and business owners during a seminar yesterday, Mr Sok Hour said: “We realised that a lot of local companies need capital to expand their businesses, but they face difficulties raising funds.
“So we are providing them with the training they need with regards to private equity investment.”
He said one of the advantages of resorting to private equity is that SMEs can gain access to expert business advice.
“We encourage entrepreneurs to use this investment method as it can represent the best solution to grow their businesses,” Mr Sok Hour said, adding that private investment funds fall under two categories: private equity firms and venture capital firms.
Pech Bolen, president of Westline Education Group, a company that has been managing private investment funds in emerging markets since 2012, said they are the best way to boost growth and heighten competitiveness for SMEs.
“Joint investment, private equity funds or venture capital are SMEs best options. It will help them achieve greater transparency and good governance, have a better business strategy, and reach solid growth,” Mr Bolen added.
Mr Bolen said that more than $300 million is currently available for local enterprises through private equity funds, but added that most SMEs in Cambodia are not ready to take advantage of them because they are either too small or have poor record keeping standards that drive investors away.
Kem Bora, a partner at Mekong Strategic Partners, an investment management and advisory service firm specialising in the Greater Mekong Subregion, said private equity investors are looking for companies that are adaptable to change.
He said investors also look at the implications of existing shareholder agreements, financial projections, sensitivity analysis, valuations, and financial records.