Large public companies most optimistic about ability to raise capital
MONTREAL, Sept. 23, 2014 /CNW/ - The majority of Canadian financial executives surveyed by the Canadian Financial Executives Research Foundation are more optimistic about their company's ability to obtain sufficient capital to meet its financing requirements in the next year (whether these needs are short-term, long-term or equity based).
Most financial executives surveyed said credit for working capital and growth financing is generally available to their organizations, according to the study, which was published by the research arm of Financial Executives International Canada (FEI Canada), and sponsored by EY. The report, entitled Targeting an ideal capital structure, is based on the results of an online survey of financial executives across Canada, which took place in June 2014. According to the study, even those for whom credit was less available this year, the expectation is availability will improve by the spring of 2015.
Eight out of ten Canadian financial executives surveyed say their companies are ready to grow, mainly through organic growth. Less than half said they were planning on inorganic growth.
"Financial executives are feeling bullish about their individual company prospects," said Michael Conway, President & CEO of FEI Canada. "Overall, their expectations are positive and the research shows that, over the next 12 months, the majority will focus on overall cash flow/liquidity and operational efficiencies while most of the other companies will focus on capital structure and effectiveness."
"With good interest rates and the economy in better shape, capital is more readily available and companies are ready to grow," said Brian Allard, Partner, EY Transaction Advisory Services. "But to take advantage of acquisition and other opportunities when they arise, they need to bake a robust due diligence process into their offensive strategy – one that can be carried out quickly, but thoroughly."
This generally positive outlook on financing and growth is not evenly reflected across the board: Large companies generally feel the ability to meet their financing needs (working capital, long term-financing and equity) was strong, with no real change in their expected outlook. Small companies weren't as secure in either their current position or expected outlook.
While only 61% of small companies surveyed felt working capital financing was either available or very available today, this same group was more optimistic about what they'd expect in the future (66% felt working capital financing was either available or very available in the future and 74% felt their long term financing needs would be fulfilled).
Although the gap is not as large, there are differences between the opinions of private and publicly traded companies surveyed. Publicly traded companies said there is a greater availability of capital than private companies and their outlook was always better than the current state (June 2014 vs. June 2015).
Public companies surveyed were far more likely to express confidence about their abilities to raise equity capital at a reasonable price. Private companies were either more likely negative about their prospects, or simply stated they did not know.
THE CANADIAN FINANCIAL EXECUTIVES RESEARCH FOUNDATION (CFERF) is the non-profit research institute of FEI Canada. The foundation's mandate is to advance the profession and practices of financial management through research. CFERF undertakes objective research projects relevant to the needs of FEI Canada's 1,600 members in working toward the advancement of corporate efficiency in Canada. Further information can be found at www.feicanada.org.
FINANCIAL EXECUTIVES INTERNATIONAL CANADA (FEI CANADA) is the all industry professional membership association for senior financial executives. With eleven chapters across Canada and 1,600 members, FEI Canada provides professional development, thought leadership and advocacy services to its members. The association membership, which consists of Chief Financial Officers, Audit Committee Directors and senior executives in the Finance, Controller, Treasury and Taxation functions, represents a significant number of Canada's leading and most influential corporations. Further information can be found at www.feicanada.org. Follow us on Twitter @FEICanada.
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SOURCE: EY (Ernst & Young)
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