Business better at courting foreign investors

IRISH entrepreneurs are now more prepared than ever before to bring in external investors to help them expand and compete in international markets. But access to capital remains top of their agenda, the chief executive of Forbairt has said.

Mr Dan Flinter said there is an increasing awareness among companies that opportunities must be provided for third party investors.

"Efficient and effective capital markets would provide such opportunities and allow promoters to be rewarded for successfully building a business.

Mr Flinter, whose organisation is charged with developing indigenous industry, warned that developing equity funds and capital markets will become a critical factor in ensuring that Irish companies can continue to grow and prosper.

Mr Flinter, who was speaking at the opening of the Irish Small and Medium Enterprises Association (ISME) annual meeting in Killarney last night, said the priority issue for the future is the development of a financial framework which will be of increasing relevance and "fit" to Irish companies' needs.

Such a framework's objectives should be to help companies realise value, create liquidity in their shares, finance long term development and create investment opportunities for investors, including the institutions.

He said Forbairt's work with Irish firms over the past 15 months confirms that companies are keen to develop by inviting in external investors.

Recent surveys carried out by KPMG, Deloitte & Touche and Forbairt, and the Department of Enterprise and Employment also confirm that this is the case, he said.

The Department's survey, carried out on its behalf by Deloitte & Touche, was published earlier this week and found that firms find it extremely difficult to get financing.

"In the past we have heard different responses to the issue of developing capital markets - for example, that there is adequate finance but not enough projects, or conversely that there are not enough investors, as well as the view that deals do not value companies fairly," said Mr Flinter.

"While these are real issues, a number of perceptible and real changes has been taking place," he said.

Mr Flinter said one significant change is that Irish industry has moved from a position of perceived "protectionism" and is interested in taking in external investors.

He said the venture capital market has also become more flexible.

He cited several funds which were launched in conjunction with Forbairt, aimed at start up and early phase growth.

Mr Flinter said that although these changes were important, the overall strategy was far from complete.

"It is essential to recognise that there is an imbalance in the returns on offer for different types of investment," he said.

He said low risk and relatively liquid saving instruments are significantly better rewarded than investments in the exposed sector of the economy - manufacturing and internationally traded services - "the areas vital for continued growth in sales and employment".

. The ISME conference continues today. Speakers will include the Minister for Enterprise and Employment, Mr Bruton, the general secretary of SIPTU, Mr Bill Attley and Mr Philip Halpin, National Irish Bank's chief operating officer.