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Capital Partners: Major deals postponed until after elections

24.06.2008, 20:42 14

The domestic M&A market is still affected by the international financial crisis, but investment funds remain interested in Romania and other emerging markets, states Lionachescu.
He attended one of the two annual meetings of M&A International in Boston last month, a network of over 41 M&A consultancies from 40 countries, whose members assisted in 380 deals worth 16bn euros last year.
In 2007, Capital Partners became a member of the organisation. How was the financial crisis felt on the M&A market? "There are two types of markets. On the one hand, there are the Western, developed, markets, on which the M&A market witnessed a significant decline in the first half (by around 30-40%) on all levels. On the other hand, there are emerging markets - Brazil, Russia, China, India, Eastern Europe, which have not been affected. On these markets, the M&A volume is higher or flat against the same period last year," says Lionachescu.
In fact, this spring's session of M&A International was called "Growing Opportunities in a Shrinking World", a title that reflects the situation. "Everybody counted on market contagion, but this hasn't happened. Private equity funds are still interested in the Central and Eastern Europe," maintains Lionachescu.
In general, how do private-equity funds and foreign investors view Romania right now? "We are not hit by the global financial crisis because relatively small deals, (10-50m euros) are sealed on our market, for which funds do not need to borrow money. As a result of the tightening of lending conditions, those markets for which funds need to raise money from banks, or other partners, to finance acquisitions are harder hit".
However, there is an impact: the M&A market is no longer a sellers' market, as it was last summer, but has become more balanced.
How will 2008 end from the point of view of mergers and acquisitions? "It's hard to say. I hope, at least, that it will be like last year. This year we have more, but smaller deals. Major deals will be postponed until after the elections," believes Lionachescu.
Capital Partners now has over 10 consulting contracts for sellers, up from 6, which were higher in value, however, in the same period of 2007.
The hot fields in the coming period could be construction materials, constructions and everything tied to food production.
Last year, a total of 110-120 deals were sealed domestically, which included 30-40 in real estate, in total worth over 6bn euros. However, the real estate market remained frozen in the first four months.

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