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Friday 23.08.2019 | Name days: Valgudis, Ralfs, Vitālijs

Current business trends in 2019 show fewer foreign investments and insolvency cases

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

In the first six months of 2019, there was a reduction of the number of insolvency cases in Latvia. There were also more business liquidations and fewer foreign investments, according to data compiled by Lursoft.

Lursoft has organized business trends observed in Latvia the first half-year by looking at dynamics for registration and liquidation of new businesses, attracted foreign capital in Latvian companies, as well as the number of initiated insolvency cases.

No changes observed for registrations of new businesses

Lursoft study reveals that in the first six months of 2019 there have been registrations of 5 549 new businesses in Latvia, which is almost as much as the number observed last year. New businesses were registered in all 119 municipalities in Latvia in the first half-year of 2019.

Lursoft notes that the total base capital of new businesses registered in the first half-year is EUR 77.1 million, which , when compared to the same period of 2018, is EUR 29.56 million more. 18.66% of this amount comes from foreign capital invested in newly-founded companies in Latvia. Compared to a year prior, the volume of foreign capital in Latvia has dropped 56.33%.

Lursoft adds that in the first six months there have been registrations of multiple businesses with multi-million capital in Latvia. Among them is Lipman family’s owned SIA Liplat Holding. The base capital of this company is EUR 33.44 million.

This company is followed by Aigars Kesenfelds’ newly-registered SIA 100x Ventures, whose base capital is EUR 4 million. The base capital of SIA Gustava parks projekti and SIA Brīvības parks projekti is as large. The true beneficiary there is Lithuanian millionaire Nerijus Numavičius.

Explosion of liquidations

The number of businesses liquidated in the first half-year of 2019 exceeded the number of newly-registered businesses. In 16 of Latvia’s municipalities the number of newly-registered businesses had exceeded the number of liquidated companies in the first half-year of 2019. Madona is in the lead with 43 newly-registered businesses and 30 liquidated businesses, according to Lursoft.

In the first half-year, liquidated companies had owed the state budget EUR 179.28 million, according to Lursoft.

In the first half-year, the number of companies that had terminated operations had increased in Latvia. While in the same period of 2018 there were 2 406 such companies, this year’s number was 2 685. Lursoft notes that half of the liquidated companies had some sort of tax debt when they were liquidated. 34 of those companies had existed for three last months without any actual officials.

Fewer insolvency cases

Statistical data compiled by Lursoft shows that the number of insolvency cases had continued to decline last year. In the first half-year of 2019, a total of 994 insolvency cases, legal protection and out-of-court legal protection processes were initiated. This is 53 fewer processes when compared to 2018.

In the past two years, the number of such cases has increased for legal persons. While in 2017 they were 27.5% of all initiated cases, they reached 34.66% in 2019.

For private persons, the tendency remains for insolvency processes to be initiated for multiple members of the same family.

Lower volume of foreign investments

Compared to the first months of 2018, the volume of foreign investments in Latvia has been lower in base capital of companies registered in Latvia the first half-year of 2019. Lursoft data shows that the total amount reaches EUR 14.39 million this year (EUR 33.26 million a year ago).

More than half of the total volume of investments in capital of new companies came from Netherlands – EUR 8.01 million. Almost the entire amount was invested in base capital of two companies – SIA Gustava parks projekti and SIA Brīvības parks projekti, whose shareholder is Netherlands-based Oland International B.V.

EUR 3.2 million come from Norway and EUR 1.21 million – from Denmark. EUR 0.61 came from Estonia and Sweden, whose residents provided the company with EUR 0.33 million.

Lursoft shows that after looking at the amount saved on the base capital of Latvian companies, it becomes clear that the total amount continued to decline in 2019, dropping below the EUR 7 billion margin, which is the lowest index since 2012.  According to statistics compiled by Lursoft, foreign investments in Latvian companies has declined to EUR 6.14 billion.

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