To interest investors in projects in Slovenia, the Public Agency for Entrepreneurship, Internationalization, Foreign Investments and Technology SPIRIT Slovenia organized several investment conferences in the past year. Last year it compiled and published a special catalog featuring the Top 100 investment opportunities for foreign investors in Slovenia.
Slovenia is searching for buyers of national companies and claims of the Bank Asset Management Company and investors in real estate, industrial zones, tourist projects and even castles in countries that are traditional foreign trading partners, such as Germany, Italy and Russia.
“But also in countries that are large capital exporters or are increasing the extent of exit investments, such as Japan and the United States of America,” explains Matej Skočir, head of the internationalization and foreign direct investment sector of SPIRIT Slovenia.
Slovenia is particularly searching for investors interested in Slovenian tourism, processing industry, the automotive industry and banking.
Slovenian investment conference in New York
Slovenia organized an investment conference in December last year during a working visit of Slovenia’s Prime Minister, Miro Cerar, who was accompanied by a strong economic delegation.
The Slovenian prime minister spoke at the New York Athletic Club to members of the European American Chamber of Commerce about the advantages of investing in Slovenia. He pointed out that the geographical position of the country at the crossroads between East and West Europe is Slovenia’s main advantage. Slovenia is small in territory but exports more to Germany than Canada or Mexico, the Slovenian Prime Minister pointed out. As well as the location, he also mentioned the Slovenian infrastructure, the highly qualified and motivated work force and the high level of innovation in entrepreneurship as some of his country’s other advantages. He added at the same time that he is aware of the urgent need to continue removing administrative obstacles and changing work legislation.
US investments have significantly increased in the past year
According to SPIRIT Slovenia the USA wants to be a major investor in Slovenia and the possibilities for increasing investment in Slovenia are many and extensive.
The Slovenian Ministry of Foreign Affairs adds that 43.6 million dollars of direct foreign investments from the USA were received by the end of last year. This is an 81 percent increase compared to the end of 2014. The Ministry also stressed that such investments are welcome from the perspective of new capital, new knowledge and technologies. Slovenia is definitely a quality location for capital-intensive investment, mostly for companies with a higher added value that would develop new products and technologies, according to the Slovenian Ministry of Foreign Affairs.
According to the data of the nation’s central bank, the Bank of Slovenia, the total value of direct foreign investments in Slovenia was over 11.3 billion dollars two years ago. Austria is the most important foreign investor in Slovenia. Austrian investors accounted for 3.8 billion dollars’ worth of investments in Slovenia two years ago, which was 33.6 percent of all foreign investments in Slovenia.
Elan and Swatycomet in American hands since last year
The sports equipment manufacturer, Elan, and the grinding wheels company, Swatycomet, are examples of Slovenian companies that received American owners during the past year. Both companies produce most of their income in foreign markets.
After years of insecurity and financial issues Elan, founded in 1945, was bought by Merrill Lynch International, owned by the Bank of America Merrill Lynch and Wiltan Enterprises, owned by VR Global Partners and managed by VR Capital.
Elan focuses on ski and snowboard production for the winter sports sector, their maritime division manufactures sail boats, and Elan Invent is the leading brand in sports facilities equipment. Since 2009 Elan has also been manufacturing wind plant components in partnership with Siemens Wind Power.
Weiler Corporation opens the door to the USA to Swatycomet
Swatycomet, the manufacturer of grinding wheels, was bought by an American family business, the Weiler Corporation, in December last year. At the handover, Weiler’s President and CEO Chris Weiler said that they were impressed by the Swatycomet personnel and development department, along with the high level of technological knowledge demonstrated by the company. “We tested their products with American customers and responses were very good. We also bought them because we want to enter the European market with our products through a large gate, which is better than own company establishment. We can provide a well-developed sales network in America and our marketing skills to our new company.”
As Chris Weiler has already pointed out, the takeover of Swatycomet is a merger of equals. “We have fewer employees; there are 560 of us and Swatycomet has 900, but we are very similar regarding income and margin, considering the different products and technologies. Swatycomet produced an income of 97 million dollars last year and we are about a 110 million company.
Swatycomet is one of the larger Slovenian exporters. They generate 94 percent of all income in foreign markets. They have sold products to 75 countries this year, mostly in EU countries where they generated 60 percent of their income. Their largest markets are Germany, the UK, France and Austria.
They produced their first million Euro income in the USA in the first half of the year. Swatycomet sells grinding wheels there as professional hand tools, and they have already received their first orders from ironworks for grinding tools. They are also reaching out to rail track maintenance companies.
American capital in NKBM bank
This year American capital entered Slovenian bank space. Along with the European Bank for Reconstruction and Development (EBRD), the Apollo investment fund became the owner of the second-largest bank in Slovenia in April of this year. The new owners paid almost 280 million dollars for the 100 percent share. Of this, Apollo owns 80 percent and EBRD has 20 percent. NKBM was previously owned by the Slovenian state during a recovery process which required 1.2 billion dollars of taxpayers’ money.
“We are looking forward to taking the leading role in the future growth and development of the bank as future owners with EBRD in order to become national and regional champions,” concluded Gernot Lohr, Senior Partner at Apollo Global Management at the conclusion of the three year NKBM sale process.
Deficiency in a rigid bureaucracy and political interference in the economy
And how would Goodyear Dunlop Sava Tires and Microsoft, who have been operating in Slovenia for decades, describe business and life in Slovenia, with its advantages, particularities and business traps?
“Despite the fact that Slovenia offers several economic advantages due to the country’s inclusion in the European Union (EU), European Economic Area (EEA), favorable geostrategic location, relatively well-developed infrastructure, high level of education of personnel with proficient foreign language skills and general security, Slovenia also has some deficiencies. High income taxation (especially in the higher pay grades), non-flexible work legislation and rigidity of bureaucracy may also limit economic development,” said a spokesperson at Goodyear Dunlop Sava Tires.
Microsoft states: “Business in Slovenia is probably significantly different than in the USA. The Slovenian market is much smaller, with Slovenia having only 2 million people, so you can imagine that communication in Slovenia is very direct and the means of communication much more personal. Business people in Slovenia are optimistic but cautious in their businesses. We think that the main obstacles to the development of the Slovenian economy are political interference in the economy, unfavorable tax legislation and a lack of government initiatives for promoting entrepreneurship.”