Acta Oeconomica 47. (1995)
1995 / 3-4. szám - Karsai Judit: Open and Hidden Channels of Venture Capital Financing in Hungary
10’ REVIEWS 373 liquidation can be bought at around 20-25 percent, while debts of companies still operating are sold at 30-50 percent. In addition to companies owned by banks, there are others which also buy and sell debts. One of the well-known buyers of risky placements is AB Faktor Kft., in the interest sphere of Bankár Kft.; another is Globex Holding (Gyenis 1995). Occasionally consulting or liquidating firms also appear on the market with their own capital, trying to take advantage of their knowledge of promising investment opportunities, which have been obtained in their main business sphere. It is important to emphasize that investing venture capital has been an involuntary function for commercial banks. Investing capital, deposited primarily for the short term, in long-term and risky investments is against the very nature of these financial intermediaries (Varga 1993). Venture capital and the investment banks Investment banks need a more specific approach. The two capital market institutions—that is, venture capitalists and investment banks—are similar in that they both invest for the long term. However, they differ in their willingness to assume a risk situation and in their respective attitudes to the size of financed ventures. Investment banks provide resources primarily to companies mature for admission to listing, and they also finance big acquisitions. They are chiefly intermediaries between investors and companies seeking capital. As intermediaries, they organize syndicated capital market deals, issue guarantees, and assume the role of market leaders (Csabai 1995). Venture capitalists, on the other hand, finance primarily smaller companies still too immature for listing. The size of their investments is limited by the fact that they are compelled to participate in the financing of several companies in order to cover the losses of certain actions by the exceptionally high profits from some others. Thus investment banks, in contrast to commercial banks, live neither on the difference between the costs of their resources and the returns of their investments, nor on the rapid buying and selling of papers. However, they are similar to venture capitalists in that, through their long-term investments, they acquire a controlling interest in the financed companies and lend their expertise as well (L. G. 1995). Participants of the venture capital industry outside the banking sector In addition to omitting banks’ investments, which in practice can be considered to be venture investments (forced debt-to-share conversions and deals with Ada Oeconomica 4 7, 1995