MATTHEW VELLA meets corporate financial specialist
Alain Mangion to see how golden advice and a tax-friendly island in
the Mediterranean has made Credinvest International a unique corporate
Theres no drawled voice slapping figures and business
jargon around, white-collared shirts or braces. A sedate atmosphere
at Credinvests Valletta palazzin greets one unexpectedly
this is a firm handling million-dollar projects for companies and governments
in Eastern Europe and the Maghreb. But suits there are little. Except
for managing director and founding partner of Credinvest International,
Theres a handsome portfolio that makes Credinvests ten-year
history a prolific one as firm with a potent contact and skills base
to know what is the most appropriate business solution to a particular
project. Typical mandates include advising a UK-based investment company
on the acquisition of a minority shareholding in an Italian regional
television, arranging financing for the stadium construction in Italy,
advising Italian cheese producers on distribution and branding, and
so forth up in eastern European and back down to Tunisia, Libya and
"We are also providing business solutions in Iran," Alain
Mangion says. "People might say who on Earth wants to take
on Iran?, but yes, there are banks out there covering Iran, and
it is a very critical emerging market for technology, and engineering
related to oil energy infrastructure.
Alain Mangion, an accountant by profession, advises clients on all financing
aspects including project finance, mergers and acquisitions, and international
and emerging project finance.
In 1993, he decided to set up Credinvest International, a boutique corporate
finance solutions firm working to advise companies on how to finance
their projects and how to come up with the appropriate cost-effective
"It didnt take long for me to realise that the skills and
contact base I had built in Malta could be successfully replicated outside
the island and not only exclusively in Malta. And now I am pretty proud
to say that this firm is a total exporter of service."
The firm got its break when Mangion met Filippo Pontiero, a business
advocate who is also a consultant to the Italian Ministry of Foreign
Affairs. He operates from Italy, from where the firm gets the majority
of its deals from: "We realised that in spite of their size, Italian
banks were not providing their customers, especially self-made entrepreneurs
and medium-sized companies, with the service they needed in emerging
markets outside Italy. We took hold of this niche and therefore, our
first client base came from Italian exporters seeking to organise financial
packages for their projects in international markets."
Credinvest also works for clients locally. It is currently making an
offer to the government of Romania for the purchase of 52 train carriages.
It is also working with the government of Bulgaria to finance a new
"These projects came because over the years we built a network
of partners and associates in these markets, so the inflow comes directly
Credinvests international structure spans the eastern bloc quite
extensively, with partners and associates in the Czech Republic, Slovenia,
Hungary, Romania, and Bulgaria and also Russia, as well as the UK and
Turkey. Now they are looking to develop their contacts at state-level
in Poland and the Baltic States.
The dynamic that makes Credinvest such a vital partner to private companies
and governments is however closer to home, namely tax-friendly Malta.
"A part of our business comprises the management of International
Trading Companies and trusts in line with the financial services legislation.
We do this to provide a one-stop solution for our client.
"Picture the scenario: we have an Italian exporter, looking for
a financial package to finance a project in Romania and then looking
to ensure the whole structure we create for him is tax-friendly. By
creating the structure with trusts and ITCs and putting finance in the
equation, we come up with a one-stop solution complete with finance
and friendly tax management."
Location, location, location. This time not the real estate tenet, but
the one which makes Malta such a beneficial fiscal regime.
With double taxation treaties with over 20 countries and special fiscal
treatment to shareholders in companies based outside Malta, the island
offers extensive relief from taxation grief. Trusts registered in Malta
offer tax-free asset transfers, zero succession duties and a fixed $600
government fee on trust income every year.
Over 1,800 structured offering such services, complete with multi-lingual
staff and EU-type legislation, are making Malta a real international
financial trading centre.
And things have changed in Maltas financial services sector. Maltas
legislative framework today makes its financial services industry one
to reckon with. Two years ago the island finally broke off its romance
with its status as an offshore bank and tax haven, to a proper EU-type
financial centre via the Malta Financial Services Authority.
A year into possible EU integration, three into joining the Euro, Governments
one-off tax on declared foreign financial assets enabled over Lm200
million to be brought back into Malta. This is good news for Maltas
financial sector. Alain says that although Malta has a good financial
services framework, forthcoming EU membership tends to give potential
investors a subconscious comfort that the business environment is in
line with a certain standard of practice to which they are accustomed
to - a proper economic framework, protection of deposits against banking
failure and rule of law.
Lack of confidence and foresight is still stifling that push outwards,
back into a sometimes regressive, inward-looking business mentality.
The stock exchange does not enjoy much confidence, with tens of businesses
still refusing flotation and diluting family control. Neither does the
public fancy the equity market, whose real pets are bonds.
"I think a bit more drive is necessary. We have all the ingredients
to make Malta a much larger and therefore more profitable financial
services centre. The right legislation is all in place, we have a good
skills base, good bankers, tax lawyers, and accountants. We just need
to find the appropriate niches to develop more one-to-one marketing,
with fund managers for example. In spite of a little bad publicity it
had in the past, we should be looking at the potential of the hedge-funding
industry in using Malta as a base. I think its all up to us to
find these opportunities.
"In terms of economic development, loads of progress has taken
place but theres room for more improvement. We need to be extremely
wary of the competitive threats to Malta. In terms of industry we must
never lose sight of the fact that Malta might be joining the EU shortly.
Together with Malta, many Eastern European markets will be joining where
there are still employees earning $100 to $150 a month, rather than
in a week as in Malta.
"That has a significant bottom-line impact on anyone interested
in foreign direct investment. So economically, anything industrial in
Malta which is of a low-cost manufacturing nature, these entrepreneurs
should not be afraid to go an set up their own plant in the emerging
Eastern European market. There are currently around 10,000 Italian-owned
factories in Romania. If anyone thinks that a shoe is made in Italy
they are wrong. It is either made in Romania or in China!
"Basically we have to focus on productivity and quality, which
are industrial niches that cannot be replaced by an Eastern European
worker that does not cost anything to employ and therefore taking on
ten of them. Its not the same as employing someone who gives you
a quality product.
"We need to take a hard look at other ancillary costs such as shipping
and telecoms and costs which are all overhead, and see if there are
ways of reducing them and not overpaying for, say port services. Otherwise,
I personally tend to agree very much with Governments strategy
for Malta as a hub even for services such as Lufthansa Technik. I think
that is a great idea and should not be over-marketed."
Alain says he would like to see a greater degree of encouragement and
incentivisation not only for foreign direct investors but also for the
Maltese entrepreneur to go abroad.
"For Malta to develop properly, the Maltese businessman must be
as comfortable doing business in Bucharest as he is in Bugibba and in
Modena as he is in Mosta. Because that is the way it works. Globalisation
is not just a fancy word. Today you must be able to make the same amount
of business and understand the needs of those markets anywhere you are.
The Maltese product is a sound product. Why shouldnt we look into
the creation of services in foreign markets?"
He looks at the opportunities open to Maltese manufacturers and producers
in foreign lands as possible and feasible with the right services to
support the need for finance and contacts. Eyeing the North African
markets, Alain Mangion says there are loads of training schools in Malta
which could easily function profitably in countries with a hunger for
Credinvests other interesting niche, making it a first on the
island, is certainly sports financing. The firm finances sports cubs
and their transactions throughout Europe, in particular Italy, providing
credit insurance for the financing bank against default by borrowing
Typical transactions include: the financing of the transfer of players
from seller to buyer and vice-versa; financing of deferred payments
due from television rights to clubs and sports organisations; financing
of annual deferred payments due from sport sponsorships; and funding
for sport infrastructures, such as ground development or construction
of new football stadiums and facilities through the acceleration of
future cash flows.
"Its a niche we developed almost by chance, talking about
entering certain sectors by pure serendipity. We found it interesting
to be able to advise the presidents of different sports clubs with regards
to different ways of financing a football team. In a way we developed
a sort of factoring service for sport clubs.
"At the moment, our main footballing project is in Italy, working
closely with the Naples city council, who invited us to advise them
on the manner the stadium it can be developed to provide a more consistent
cash flow. As in all countries, a stadium is a prime piece of real estate
used once every two weeks for a football match."