The best of Markowitz and the “trust property”
The objective of the solution is to escalate the securitization of SMEs as a way to minimize the cost to securitize future cash flows of SMEs and to minimize the risk of the certificates.
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Nombre
Tomás
Apellido
Perez Virasoro
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Organización
País
Argentina, C
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La solución propuesta
Nombre de tu solución
The best of Markowitz and the “trust property”
Describe tu solución
The objective of the solution is to escalate the securitization of SMEs as a way to minimize the cost to securitize future cash flows of SMEs and to minimize the risk of the certificates.
País/es o región/es en el que se centra tu solución
Argentina, C
Si son múltiples países, indícalos aquí. Si tu solución apunta a toda una región, por favor selecciónala debajo
Región(es) a las que apunta la solución
Latinoamérica y el Caribe.
Volumen de ventas en USD
US$6-10 millones.
Promedio de volumen de ventas
more than six million
Número de empleados
5-24.
Promedio de número de empleados
more than fifteen
Especifica el tamaño, el promedio y la gama de préstamos o inversiones previstos en cada empresa
The size, average and range of loans or investments provided depends on the number of firms that participate in each securitization.
¿En qué fase está la solución propuesta en la financiación de las PYMES?
Fase de idea
Innovación
¿Qué hace única a tu innovación?
What makes my innovative solution unique is the possibility of use the best of the Markowitz’s economic theory and the “trust property”.
This combination can unlock private finance for SMEs by different reasons:
a) Because it could be allow SMEs to access to a larger financial market.
b) It could do it with less fixed costs.
c) It could have a less discount rate.
d) It could use future income to finance the investment needed to produce the product or service that will generate this income.
¿Cómo es que tu innovación apalanca la intervención pública para catalizar la financiación de las PYMES privadas?
The Markowitz’s economic theory proves that exist a market risk or systematic risk and a no-systematic risk. In this way, he proves that an investor can reduce his risk if he incorporates stocks whose movements are not in the same direction.
On the other hand we have that the SMEs can use the “trust property”, through a trust agreement, to sell a future income. Thus they can securitize the future cash flow and use it to finance the actual investments.
If the public sector or a private company could joint different futures cash flows of different SMEs (which sell its products to different economy sectors) in one financial product and issue certificates we could obtain a better product than if they do it alone (this is my innovation).
Better because the risk will be lower than if a SME securitizes its future income alone (reduces the systematic risk reducing the variants of expected return that could not be done by the SME by itself). Plus the fixed costs of the securitization will be lower. And they could access to institutional investors and to publics offers.
In addition we will expand this way of finance that is not very common between the SMEs.
¿Qué barreras aborda tu solución?
Asimetría de la información, Informalidad, Falta de acceso de las PYMES a las habilidades / conocimientos / mercados, Falta de disponibilidad de productos financieros adaptados a las necesidades de las PYMES, Altos costos de transacción para los intermediarios financieros para servir a las PYMES, La falta de competencia e incentivos para los intermediarios financieros para servir a las PYMES.
Describe cómo lo hace
My proposed solution addresses a lot of barriers and more if it is launch by the public sector:
a) If this solution is handled by the public sector the asymmetry of information will be less for the SMEs. This because the public sector could canalize without cost for the SMEs all the questions and information they will have.
b) Obtain a better finance rate would encourage SMEs to be more formal. Because the balance sheet and comply all the laws will be key to access to this kind of finance.
c) The lack of skills, knowledge and markets will be overcome with this new way of financing. The public sector must have the skills necessaries to make possible the financing. And with the time the public sector could transfer these skills and knowledge to the SMEs. Plus the SMEs solve the problem of lack market, because now they will access to institutional investors.
f) It is a new financial product tailored to SME needs.
g) We cut the transaction costs for the SMEs. We distribute the fixed costs with a lot of SMEs (between all which participate in the issuance).
i) This is a new way to improve the manner that SMEs achieve the financial markets.
Impacto
Proporciona evidencia empírica del éxito y/o impacto actual de tu solución
In Argentina the SMEs create seven out of ten jobs. And arise fifty thousand new SMEs every year.
Now I don´t have empirical evidence of my proposed solution´s success/impact because is a very new idea and I am going to launch it in the near future.
But what I have empirical evidence that the “trust property” is being used by medium size company (i.e. Garbarino, Fravega) and this create it the possibility to sell in installments and then transfer in the financial market the future cash flow. And these kinds of product are very accepted in our financial market because they performed very well in the deep crisis on 2001.
And in the other hand we know that we can reduce the risk of a financial product if we put futures cash flows which have inverse behavior together. In this way we reduce standard deviation diversifying the risk (Markowitz´s theory).
¿A cuántas empresas esperas llegar?
In Argentina are around nine hundred thousand SMEs. I expect to reach the largest possible number.
¿Cuál es el volumen de financiación de las PYMES privadas que tienes por objeto catalizar?
The nine hundred thousand SMEs in Argentina generated the forty five per cent of the gross domestic product (137 billon US dollars). And is too little that percentage of them which can access to tailored financial products.
Only the thirty per cent of the SMEs can access to financing and with very large rates.
¿Qué plazo se requerirá para alcanzar estas metas?
In Argentina we have the law 24.441 of “trusty property” (fideicomiso) and we have a capital market in where can be offered the financial products.
What we have to develop or in what we have to work is the manner to make well- known this way of financing.
According with that, we do not need a lot of time. It may be a year.
¿Tu innovación contempla tener un impacto en las políticas públicas?
Sí
¿Qué podría atentar contra el éxito de tu solución innovadora?
It May be the informality of the SMEs.
Perhaps it will not be easy to find different companies with expected future cash flow inverse in the same time.
This Entry is about (Issues)
Cuéntanos sobre el impacto social de tu innovación. Por favor, incluye números e historias como evidencia de este impacto
As I told above, the SMEs in Argentina are the main form with is created the job. And it is not little important. My country holds more than ten per cent rate of unemployment.
And the financing is one of the most important problems for our more than nine hundred thousand SMEs. There are a lot of project that can´t be done due on lack of financing.
It is very difficult to the SMEs access to these kinds of tailored financial products alone. But if we can join SMEs in these financial products we can improve the way of SMEs´s access to financing.
In this way we can make more projects viable, improve income, generate new jobs, and so.
Sostenibilidad
Haz una lista de todas las fuentes de financiación que se requieren para la sostenibilidad de esta solución
What we only need is have a private sector willing to invest in this kind of financial product. And I am sure that the market is waiting for them.
In the other side we have a lot of SMEs without the financing needed.
Demuestra cómo tu solución tiene la capacidad para dejar de depender del financiamiento público. ¿Cuál es el plazo?
My proposed solution is a new way to gather the SMEs´s financing with the needs of private sector´s invest. We do not need the public sector to make it possible.
What we need is the public sector´s support. Our main challenge is to make well-known this new way of financing and its benefits.
Demuestra cómo tu solución podría sobrevivir a una pérdida potencial de su principal fuente de financiación privada
We do not need large private funding. What we need is a private sector willing to invest. And this new product with less risk will be welcome very well.
Por favor, dinos qué tipo de alianzas, en tu caso, podrían ser cruciales para alcanzar un éxito mayor y la sostenibilidad de tu innovación
I think the public sector´s support could be very important but not really critical for the success and sustainability of my innovation. If we have its support we can ensure both of them.
¿Existen cuestiones no financieras que podrían amenazar la sostenibilidad de la solución?
No there aren´t. Everything depends on the grade of knowledge that achieves the product and its benefits.
Por favor, cuéntanos si tu solución tiene por objeto tomar escala a través de un alto crecimiento del sector, su expansión inmediata a múltiples sectores y/o a través de una escala geográfica
The proposed solution aims to expand this way of financing immediately to multiple sectors because that could be making possible combining different risks in the same tailored product.
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