Partner at the law firm SORAINEN Maxim Sologub told about the evident trends of Belarusian M & A market.
– This year Belarusian M & A market is facing a severe downturn. The number of international merger and acquisition deals, aimed to purchase Belarusian assets, has been decreased. I mean one to two dozens of transactions a year. But despite this, there have been several trends of M & A deals in Belarus for the last 3-4 months.
1. Low company value. If there is a deal, then its value is about $ 3 million on average. Major transaction in Belarus can be considered as a transaction at $ 10 million, but at present there are no such deals.
2. Western companies are interested in Belarusian assets. It is higher than expected.
Companies from the EU (especially, Italian ones) are highly interested in cooperation with Belarus. Scandinavians (the Finns, the Swedes) are also active. I have not seen such interest of them since 2008-2010.
Regarding the form of cooperation, the foreign investors also unexpectedly show their interest in greenfield projects (creation of an enterprise from scratch and starting a new one) and brownfield projects (dealing with old facilities) However, the majority of investors are interested in greenfield establishment. Purchasing mature companies is not regarded as desirable.
Investors hold their interest in the following sectors:
- Food production. Partly – agriculture
- Production of industrial equipment
- Production of technical equipment and component objects
- Assets of our IT sector
- Pharmaceutics
- Transport
The banking and insurance sectors can be considered as inactive and quite. But the Chinese financial group might enter this market. Russian investors are predictably less active than usual.
3. The appearance of a new player — Chinese companies. The Chinese investors entered the market five years ago. They are willing to buy interests in Belarusian projects. There is little information about such transactions, as Chinese businessmen are extremely jealous of disclosure. Although we know that Belarus has already signed contracts with China.
According to our sources, several Chinese companies are investing in infrastructure and energy projects. “Chinese” trend has emerged, and it will definitely proceed.
4. M&A is expected to grow in 2016
There are several prerequisites for it:
- The market is at a low point. And we hope that later it will increase due to the low base effect (the market will proceed from the low point and will go up).
- A specific pending interest will be aroused
The following factors can promote the growth:
- Lack of escalation of the conflict in Ukraine.
- Removal of the problems between West and Russia
- Positive changes in the politics of Belarus can be observed. Thanks to this, the investment climate of Belarus will be rather attractive to foreign investors.
All the above factors will provoke a strong interest from foreign investors in cooperation with Belarusian companies.
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