Individual Capital Investment
MFB Invest Zrt. may invest only in Hungarian-based business organizations. The fundamental aim of equity financing is to create an economically optimal resource structure and loan-to-capital ratio for companies, but equity financing can also provide additional resources for companies and promising projects that are unable to obtain bank loans due to their past performance or their collateral background. We use MFB Zrt.’s own funds for our investments.
MFB Invest directly invests in growth-stage individual projects requiring a larger asset contribution. MFB Invest Zrt., as a capital investor, has a significant role in financing SMEs in case of market failure, as they have less access to bank financing in their early life cycle stages than it would be required esteeming their development potential. A sufficient level of capital adequacy, commercial banks cannot participate in their financing, as some SMEs are not able to provide the required level of capitalization for bank financing.
Capital investments have several benefits. The capital increase provides the client the necessary resources to carry out the investment planned, where the increased equity can also give the opportunity to take out a bank loan. Its market position is strengthened vis-à-vis its competitors.
To whom is it recommended for?
- For businesses based in Hungary.
- Primarily aimed at companies in the top segment of the small business sector (non-start-up), medium-sized companies, large companies, typically with a turnover above HUF 1 billion.
- Companies with stable management, growth potential and positive profitability prospects.
- Mainly for businesses operating in the mechanical engineering, manufacturing, energy, services, technology and health sectors.
What is the average investment size?
The lower limit of the investment amount is typically HUF 500 million.
What can the capital be used for?
- Investment and development or related enlargement,
- Investment-related working capital financing,
- Research and development activities,
- Marketing, market development,
- Entering new markets,
- For human resource development, training, retraining.
Participation in investments
Under the law governing MFB, the Company participates in the investments only as a minority shareholder, and as an investor it holds up to 50% minus one vote in the company. It does not require classical collateral but does stipulate minority protection rights.
A co-investor is also involved in the investments of MFB Invest, with the minimum of 30% capital requirement provided by private investor. As a financial investor, MFB Invest’s main task is basically inspecting the financial processes of the companies and continuously monitoring the plans set, but as a “partner” investor, considers it an important task to use its financial and business experience to continuously support the activities of the companies in its portfolio.
In order to achieve the broadest possible financial control, the use of the capital may be subject to the approval of the Financial Commissioner appointed by MFB Invest, members of the Board of Directors and the Supervisory Board delegated by MFB Invest will be appointed to the target companies.
In accordance with the interests of MFB Invest Zrt., in the case of all capital investments, efforts must be made to maximize the return available on the basis of the market return environment, and to achieve a positive real return exceeding the costs of the capital investment.
Methods Of Capital Investment Exit
The purpose of MFB Invest is to exit from its stake within 4-7 years following the investment and to stimulate the national economy throughout further capital investments. The method of exit or sale is already specified in the contracts concluded at the time of the investment. These can be:
- Exercise of option rights,
- Stock exchange sales,
- OTC sales (over-the-counter sales)
- Buying out on a loan,
- A public issue in the case of a listed company,
- Management buyout,
- Trade sale (sale to a market or professional investor).
