The emergence of mass investors will help attract companies to the Armenian capital markets

The topic of attracting companies to the financial sector became a key topic at one of the panel discussions of the first investment and financial forum “Armenian Capital Markets: Future Outlook.” The event took place in early March in Yerevan and was organized by Freedom Broker Armenia together with the Ministry of Economy of the RA.

The speakers discussed the current status of the development of financial market infrastructure and the role of the state, issues of organizing issues, as well as opportunities for listing in Armenia and the transition from bond placements to IPOs. Deputy CEO of Freedom Broker Armenia Eduard Safaryan noted that the situation is gradually developing, more and more brokers and banks are involved in capital, support for the sector is included in the state strategy. But despite the positive trend, there is still something to think about.

CEO of Financial Market Members Association Karen Zakaryan noted in his speech, in Armenia business is accustomed to working with the standard banking system and using loans as the main tool for raising funds, while the issue of securities opens up completely different horizons for companies. There is money in the country that can be invested in the development of the business. There are now $14 billion concentrated in dollar deposits alone.

“We have $2.4 billion here that can be invested. There are 18 banks that are investors and agents of government debt; they have $3.6 billion of equity capital. Plus there are investment companies, pension funds. All this can be used by a business if it is attractive. But this is a matter of developing our corporate bonds,” Karen Zakaryan explained. According to him, the volume of bonds has already increased 4 times since 2018. This is a consequence of reforms that were launched in May 2020.


The topic was continued by founder and chairman of the board of directors of Сbonds Sergey Lyalin. According to the data he provided, in Armenia the total volume of corporate bond issues is $970 million. But this is not so much in comparison with other CIS countries.
There are only 20 issuers in Armenia, there were 115 issues of corporate bonds, of which only eight represent the corporate sector. That is, there is a bias towards financial institutions. To attract companies, the republic can use the experience of its neighbors. Plus they can use the formation of a secondary market, increasing the role of market makers, information transparency and credit ratings.

The speakers agreed that IPO is the next level of maturity of the sector after the issuance of bonds. Deputy Secretary General, Federation of Euro-Asian Stock Exchanges Armenuhy Hovakimyan noted that education is important here. If authorities want to develop the financial market, they start by educating future issuers.

“They go the whole way together, together. And there is a lot of support from the state. All this leads to the fact that organizations themselves want to open up and enter a larger space. If a company is created and has big ambitions, it takes about 10 years to enter the capital market. If it already exists, it will take 5-6 years for an IPO,” -Armenuhy Hovakimyan noted.

Team Telecom Armenia became the first communications organization in the country to move to an IPO. As its financial director Karen Mnatsakanyan admitted, this was a consequence of evolutionary development.

“It was important to us that we had enough finance for our capital expenditures. The questions were not whether or not to do an IPO, but when. This allowed us to make very good progress and attract resources. We were far from sure that we would succeed. The surprise was that we received financial support from all the organizations we needed. Now it's important that this is not a one-off release. So that other organizations follow us,” Karen Mnatsakanyan summed up.