CFI.co Meets the CEO of WIR Finanzierer: Mark H van den Arend
Sometimes, all one needs is a break – lucky or otherwise. Mark H van den Arend got his one when Deutsche Bank hired him despite being a teenager with a slightly crooked CV that contained no discernible experience in either finance or administration.
As it happened, this young man just liked the whole idea of negotiating deals and working the numbers.
Deutsche Bank did not regret its audacious choice and supported Mr Van den Arend to obtain an MBA from Ashridge Management College and The City University of London. With a remarkable knack for identifying – and rectifying – market inefficiencies, Mr Van den Arend soon worked his way up the hierarchical ladder: “After two decades, I ended my career at the bank as a managing director overseeing its operations on Wall Street. Soli Deo Gloria.”
However, the at times glaring and puzzling shortcomings of markets continued to fascinate this South African-born banker who is now the driving force of WIR Finanzierer, a German financial services provider sharply focused on helping small and medium-sized enterprises (SMEs) gain access to capital. “Even though Germany is an overbanked market, plenty of well-run SMEs simply dislike dealing with banks and hence are increasingly receptive to other means of financing.”
With WIR Finanzierer, Mr Van den Arend has set out to tackle the problem. His company helps SMEs obtain “indirect” access to capital markets with amounts ranging anywhere from €500,000 to €10m per client. With the refinancing of bundled SME bonds, WIR Finanzierer is conceptually applying a structure similar to a securitisation. The process is remarkably fast and requires each SME bond issuer to obtain an indicative rating from rating agency Euler Hermes.
Once properly screened, financing may be arranged via WIR Finanzierer. “The process is transparent from end to end so that SMEs and investors alike know precisely what they are buying into. Moreover, WIR Finanzierer always participates with its own funds and refrains from anything which would jeopardise the simplicity, transparency, and comparability of its transactions.”
While SME financing, or the dearth thereof, is near the very top of both the political and economic agenda, so far little has been done to tackle the problem. Although there is more than enough money slushing around the economy, it fails to reach most SMEs.
Given the immense significance of the SME-Sector to overall economic health, it is of paramount importance that SMEs have efficient access to sufficient financing – for modernisation and expansion.
“That is precisely what WIR Finanzierer does. We act in a swift and decisive manner. The streamlined procedure allows for snap decisions. Not only SMEs are thus helped, investors also benefit enormously as they receive access to an asset class previously unavailable to them: the vast universe of the German Mittelstand. The portfolio returns – on average about six percent annually – are attractive as well, considering the investment grade profile of this investment.”
Tapping into the multibillion euro German SME market is only the beginning. WIR Finanzierer also eyes expanding into neighbouring countries, deploying the same strategy of splitting larger investments into bite-sized bits for SMEs who are, due to their size, otherwise unable to tap capital markets on their own.
“People who understand what we are doing realise that we are at the forefront of the European Capital Markets Union. The fact that we bring together SMEs and capital markets investors in a unique way is probably the main reason why you find our SME bond factsheet (KMU-Anleihe) on the website of the European Commission.”