On Wednesday, February 25, the Ministry of Finance (MoF) submitted an informational report to the Cabinet of Ministers titled “On Proposals for Capital Market Development and State and Local Government-Owned Enterprises to be steered toward Initial Public Offerings.” The report provides information on the fulfillment of capital market development goals and the progress of state and local government-owned enterprises (SOEs and MEOs) toward initial public offerings (IPO), as well as additional proposals for capital market development.
On May 16, 2023, the Cabinet of Ministers (CoM) reviewed the informational report “On the Further Development of the Latvian Capital Market.” Taking into account the level of capital market development described in the report and the significance of a developed capital market for economic growth, the CoM set a medium-term goal – to increase stock market capitalization to approach the levels of the other Baltic states, as well as to meet the criteria for emerging market classification. At the same time, the importance of capital market development in promoting access to financing and expanding investment opportunities, while ensuring a high level of investor protection, was emphasized.
Based on the gathered information, AS “Air Baltic Corporation,” VAS “Latvijas autoceļu uzturētājs,” and SIA “Rīgas namu pārvaldnieks” are currently evaluating options and performing preparations for an initial public offering or the attraction of a strategic investor by 2027. However, the progress of these companies alone will not suffice to reach the established market capitalization target.
The informational report examines the benefits to the state from capital attraction or the partial divestment of shares in state-owned companies, including efficiency improvements, investment attraction, promotion of competition, and reduction of the financial burden. The OECD 2024 Economic Survey of Latvia concluded that the capital market is underdeveloped, limiting companies' opportunities to attract non-bank financing.
In a discussion with capital market participants on January 29, 2026, it was emphasized that the growth of the Latvian capital market is restricted by a lack of companies of sufficient scale and suitability for the capital market, as well as challenges in the pre-IPO stage – an insufficiently developed startup ecosystem, limited financing opportunities for venture capital funds, and low activity from local institutional investors. This hinders companies from entering the stock exchange and slows down the market's development potential. At the same time, the launch of the Baltic Capital Market Acceleration Fund and the role of state-owned enterprises in market development were positively assessed.
On February 25, Minister of Finance Arvils Ašeradens met with social and cooperation partners – the Employers' Confederation of Latvia, the Free Trade Union Confederation of Latvia, the Latvian Chamber of Commerce and Industry, and the Foreign Investors' Council in Latvia – to discuss the current development of the capital market, challenges, and necessary further steps for its strengthening. The partners expressed readiness to continue close cooperation to promote capital market development, increase investment volumes, and strengthen the resilience and growth potential of the Latvian economy. Simultaneously, the necessity to strengthen the governance of state-owned enterprises was highlighted, including considering a centralized professional model and basing decisions regarding companies' movement toward the stock exchange on their growth needs.
The informational report envisages additional measures for capital market development, including participation in EU initiatives, improvement of savings and tax regulations, promotion of savings bonds and capital market instruments, strengthening of companies' financing attraction opportunities, as well as the development of the regulatory framework (including REITs, securitization, the institute of investor representative, and market infrastructure).
The informational report is available on the Legislative Acts Portal.
