Illar Kaasik | Fresh TOP 101 reflects both the challenges and opportunities of Estonian economy


Illar Kaasik, Managing Partner at Prudentia Tallinn 

Estonia's most valuable enterprises TOP 101 ranking of 2021 already reflects both the twists and turns of the pandemic, as well as fresh challenges and growth opportunities. This year is the third time Prudentia and Nasdaq Tallinn have compiled the most valuable companies top, which creates a series of comparable data and a good opportunity to analyze the local economy in the long run.

2021 Estonia’s most valuable enterprises TOP 101 was compiled based on companies’ 2020 financial results and stock market June 2021 multipliers. Recording the yearly market situation was one of the goals of creating the top, but as a sort of a happy chance, the first ranking in 2019 was compiled just before the coronavirus pandemic. This gives us invaluable reference material for years to come.

TOP 101 of 2021

At first glance, the top leaderboard has remained largely the same – 80% of the same names appear in both the top ten and the top in general. However, the more detailed figures reflect the general optimistic growth phase that the Estonian economy seems to have reached. This year, we have seen both double-digit economic growth rates and the highest inflation in Europe, and now a sharp increase in the value of companies.

For the second year in a row, we find Eesti Energia at the top of the TOP 101. Its EBITDA has decreased by almost 60 million euros, but its value increased by 30% – primarily due to the increase in the share of renewable energy and the predominantly favorable economic environment. Today, Eesti Energia also sets all-time sales records, which is facilitated by the rapidly growing electricity market price.

While the total value of the 2019 and 2020 tops was relatively similar (€ 20.74 billion and € 20.69 billion respectively), the value of the 2021 top has risen to € 28.99 billion. This is partly affected by the change in the financial sector methodology (instead of the EU region financial sector multipliers, we based our calculations on Scandinavian multipliers), but the recovery of stock markets in general has certainly played a role. The Covid crisis has reached some stability, and additionally, governments have stimulated the economy with aggressive support programs. Similarly, the Nasdaq Market Cap grew from € 21.7 billion in 2020 to € 33.7 billion in 2021.

It is also noteworthy that in 2019 you needed a company value of at least € 67.1 million to get to the top, in 2020 the limit was € 58.7 million and in 2021 € 86.3 million! However, we should point out that although the total value of the top increased, the EBITDA of the companies decreased by almost 300 million euros – a large part of which can be attributed to Tallink and Eesti Energia.

Startups – the seeds of Estonian economic future

It is worth noting that while the total value of TOP 101 valuable enterprises came to € 28.99 billion, the total value of the TOP Tech 25 growth companies in Estonia was € 21 billion in October. Although the methodology for evaluating fast-growing startups is somewhat different than valuation of classic value companies – and as a result, Wise or Bolt, for example, do not appear in the TOP 101 – this is a good illustration of the role of startups in the Estonian economy.

In 2021, Prudentia Advisory, Siena Secondary Fund and the Estonian Founders' Society compiled the TOP Tech ranking for the first time in order to better measure their weight and potential in the Estonian economy. Speaking of tangible numbers, today about 1% of Estonian employees work in tech companies, paying the state about € 130 million in labor taxes. At the current growth rate, by 2030 growth companies may already account for 30% of Estonia's gross domestic product.

Technology top assessments also take into account the companies’ future potential – and they definitely have plenty of potential. It’s no exaggeration to say that seed companies are sprouting into the engine of Estonia’s economy. It’s worth keeping an inquisitive eye on the sector.

Enefit Green turns the challenge of going green to an opportunity

Coming back to the TOP 101 winner Eesti Energia, the IPO of Enefit Green deserves special mention. The timing of the IPO was exceptionally successful – the moods in both the global and the local stock market were optimistic and a lot of free money was waiting for the suitor. Renewable energy is a hot topic in itself, not to mention the company's portfolio includes a diverse selection of different renewable energy sources – solar, wind, water and pellets. The investor demand exceeded the initial offering by four times, the share emission was increased by half and over 60,000 investors turned Enefit Green into a hot public share.

In the preparation of TOP 101, the IPO was still pending and its full effects can be seen in next year's rankings. By today, Enefit Green has also announced excellent third quarter financial results, which could only rejoice the new investors.

Enefit Green is currently the most prominent part of Eesti Energia's green future vision – but why not the future vision of the Estonian economy as a whole? Looking ahead at the coming year and decades, the rise in energy prices and inflation, as well as the availability of raw materials, can be viewed with both concern and excitement. Not to mention the Covid crisis, with Estonian coronavirus infection rate yet again the highest in the world.

What if we took these challenges as an extraordinary opportunity instead of an obstacle? Do we define ourselves as an oil shale country or a unicorn country? The success of our digital society and technology sector creates extraordinary preconditions for Estonia to be among the solvers and winners of the green revolution.


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