M&A 2021 activity in emerging markets rebounds as deal value rises – Archyde

The results of the CMS Emerging Europe M&A 2021 report, released today in partnership with EMIS, show that 2021 has been a year of recovery and recovery for dealmakers in Europe’s emerging markets. Not only did the region recover from its 2020 slump, with transaction levels rising to 2,015 transactions in 2021 (up 18.2%), but emerging Europe also recorded a total value of transactions that hit the highest level since 2013 – an increase to EUR 94.27 billion (plus 55.1%). .

Horea Popescu, Head of CEE Corporate M&A Practice, CMS, comments: “M&A activity in emerging Europe experienced a resurgence in 2021, with buyers and sellers appearing to be regaining confidence amid the prospect of the pandemic being brought under control. The year got off to a strong start, with deal numbers recovering significantly in the first three months of the year and reaching a level similar to 2019 – a trend that then continued into the fall.”

Stefan Stoyanov, Head of M&A Database at EMIS, says: “In 2021 we have seen dealmakers adapt to the new normal of the pandemic and push M&A forward. The results of this year’s report show the return of dealmaker confidence as quarterly deal values ​​hit 20 billion for five straight quarters.”

PE activity continued to increase and IPOs picked up speed

Private equity is now firmly embedded in the deal-making culture of emerging Europe. Building on the buoyant numbers of 2020, private equity activity continued to grow, with deal numbers hitting an all-time high (399) and values ​​rising by 18% (EUR 23.75bn).

IPOs also had a record year as the number of listings rose to 116 (up from 26) and values ​​to €13.47 billion (up from €4.79 billion). These figures reflect the success of regional stock exchanges such as Warsaw, Bucharest and Istanbul in attracting new listings, while those in London, Amsterdam and New York continue to attract companies seeking international investors.

Leading Industries

Telecom and IT again topped the deal charts, accounting for five of the ten largest deals of the year. The number of transactions increased to 450 (from 333) and the sector recorded the highest transaction value with EUR 23.4 billion. Significant telecom deals included the sale of Polkomtel Infrastructure and UPC Polska in Poland, and the sale of České Radiokomunikace and a 30 percent stake in CETIN in the Czech Republic. Notable software deals included the €7.3 billion sale of Avast Software in the Czech Republic and the €1.6 billion purchase of games developer Nexters Global by Kismet, both with roots in Russia.

The real estate and construction sector was the second largest sector with 340 transactions (out of 310) and a 3.8% increase in transaction value (EUR 9.83bn). Offices remained the leading real estate sub-sector despite a 19% drop in transactions. Similarly, warehousing and logistics also maintained their sub-sector placement, reflecting the ongoing shift to e-commerce. Manufacturing was the third largest sector with 253 transactions (out of 236) and the second largest by value at €18.26 billion. Meanwhile, Mining, Oil & Gas was the third largest sector by value at EUR10.59bn, although it was one of the few sectors where the number of deals fell (from 124 to 105).

Growing investor interest in climate action helped push the total number of energy and utility deals to 122 (up from 73) and the sector accounted for 6% of total deals (up from 4.3%). The renewable energy sub-sector saw particularly impressive growth in both transaction activity and value, with 81 deals (out of 44) and a quadrupling in value.

In Romania, the telecoms and IT sector remained the most active sector with 38 transactions representing 19.5% of all M&A transactions registered in 2021. Real Estate & Construction came second with 31 transactions, accounting for 15.9% of the total. Manufacturing and retail ranked third and fourth with 27 and 18 transactions, respectively, last year.

Rodica Manea, Corporate M&A Partner at CMS Romania, says: “The statistics for 2021 are evidence that the local M&A market is recovering quickly after the pandemic and returning to pre-COVID volumes. The Romanian market remains competitive and attractive for investors and we are optimistic that it will continue to grow in the coming years, particularly in the telecom and IT sectors as a result of digital transformation, as well as in renewable energy and manufacturing, among others .”

Country Hotspots

Three notable M&A hotspots were Croatia, Romania and Ukraine, all of which exceeded pre-pandemic deal numbers. In Croatia, transaction numbers and values ​​reached record levels of EUR 69 billion (up 60.5%) and EUR 1.8 billion (up 387.4%), respectively. Transaction activity also hit record numbers in Romania (195 transactions, up 43.4%), but transaction value fell by 9.6% (EUR 2.37 billion). Transaction numbers in Ukraine recovered strongly (up 57.1% to 143) and the country’s total transaction value doubled to EUR 1.72 billion.

Foreign and regional investment is reaching new heights

The United States was the most active foreign investor. The number of US deals rose to a decade high of 154 (from 94) and values ​​more than doubled to hit a record high of €9.17 billion.

European investors also showed strong interest in deals in emerging European countries, and the top three European investors were the UK (106 deals), Germany (81 deals) and France (54 deals). The same three countries also topped the charts for transaction value for European investors; Germany leads the field (EUR 3.13 billion), followed by Great Britain (EUR 2.08 billion) and France (EUR 1.91 billion) in second and third place. The UAE moved up the foreign investor rankings, securing tenth place for its transaction count, the highest outside of the US and Europe.

Cross-border mergers and acquisitions remained buoyant, with deals up 28.9% (985 deals) and values ​​up 59.8% (EUR 56bn). Meanwhile, domestic transaction values ​​reached EUR 38.3 billion (up 48.1%), the number of transactions increased by 9.5% (1,030). Overall, Russia was the largest single investor country with 564 transactions worth EUR 37.3 billion – almost all (96%) of which were domestic transactions.

Outlook for 2022

Radivoje Petrikić, CEE Corporate Practice, CMS, comments: “M&A professionals have shown their ability to adapt to any challenges 2022 might throw at them. Although uncertainty about the impact of new variants and the prospect of economic fallout from higher inflation led to a more cautious end to the year, our results show that dealmaker confidence has largely been restored. In 2021, the key drivers of deals have been long-term underlying trends such as digital, and as the pace of change and digital adoption continues to accelerate, the fundamentals for an active dealmaking market remain firm.”

Emerging European countries include Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, North Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine.

Reference-www.nach-welt.com

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