Green Deal shifts energy investors’ focus to renewable assets

By Julian Gikov, George Mucibabici Jr., Konstantin Ivanov,
Helena Simicevic, Anita Varbanova | Mergers & Acquisitions, Raiffeisen Bank International AG

Mergers and acquisitions (M&A) activity in Southeast Europe (SEE) slowed down in 2019 and the first half of 2020, with transactions amounting to 9.3 billion euro and 2.1 billion euro, respectively. Privatisations remain a strong driver in Serbia, Slovenia and Croatia, though deal volume is still highest in Romania and Bulgaria. The improving climate in 2019 helped conclude a number of high-profile transactions in the technology, media and telecom (TMT), energy, financial institutions, infrastructure and real estate sectors. The anticipated Green Deal is shifting the focus of European energy investors back to renewable assets in the SEE region. Stable regulatory environments and improved investor and lender confidence are resulting in increased interest in greenfield and brownfield investments in renewable energy sources (RES). Growing awareness of environmental issues is also impacting deal executions and business plans, especially in emissions-heavy sectors. Covid-19 impacted heavily transaction execution and transaction appetite especially in the more cyclical sectors of real estate, fast-moving consumer goods (FMCG) and transport. Nevertheless, we see confidence returning in the second half of 2020, supported by the still available attractive financing options. Recapitalisation efforts and a refocus on core business activities are among the other factors impacting the M&A scene.



M&A deals volume and value in Bulgaria rose in 2019, supported by accelerating GDP growth (3.37%). The average value of the deals was 73.2 million euro. However, the economy is expected to contract by 5.7% in 2020 due to the COVID-19 pandemic. This translates into decreased transaction volumes in 2020, as companies are more focused on sustainability rather than on expansion or exits.

Certain sectors such as RES, TMT and e-commerce were less impacted and deals continued to take place at similar valuations as in 2019, albeit transaction closing periods were extended overall. Other sectors, such as industrials and FMCG, however, saw a number of cancelled or postponed sales.

Some of the largest deals on the Bulgarian market during 2019 and the first half of 2020 were the acquisition of Vivacom, the largest integrated telecom operator in Bulgaria, by the region’s leading telecom and media operator United Group for a reported 1.3 billion euro; the acquisition of BTV by PPF, pending regulatory approval; and the acquisition of Nova Broadcasting Group by Advance Properties. The TMT space continued to attract the interest of Western investors, as evidenced by the acquisition of SMS Bump by Yotpo, an e-commerce platform.

The award of the Sofi a Airport concession to a consortium of French asset manager Meridiam and Strabag with Germany’s Munich Airport was the largest infrastructure transaction in the country to date and is expected to have a positive impact on future publicprivate partnerships (PPPs) in infrastructure.

The sale of the 60.4MW Karadzhalovo PV plant by Blackrock, ACWA Power, and Crescent Capital to Enery Development, an Austrian renewables investment company, is the largest RES transaction in the country to-date, showcasing the attractiveness of the sector to outside investors. Interest in the RES space is expected to continue to drive deals and greenfield projects. The expectations related to the Green Deal further stimulate interest in renewable assets in the country, both brownfield and greenfield. Highly favourable finance pricing available on the equity and debt sides remains an additional driver. A number of new greenfield projects are in the pipeline as industrial and real estate investors are looking to diversify their portfolios with RES assets to partially offset their electricity costs and CO2 footprint. Whilе conventional energy is still critical for the system, we also see significantly less interest in it. The market also sees more investors start operations in the ESCO space, targeting both households and business clients. In transaction execution we see a sharper focus on health and safety and environmental due diligence. Business plans are increasingly taking into consideration carbon footprint and steps to reach carbon neutrality.

Following the exits of Alpha Bank and Piraeus from Bulgaria, activity in the financial sector declined. The capital increase of First Investment Bank which managed to attract equity on the Bulgarian Stock Exchange deserves mention here.

On the other hand, the industrial sector saw increased M&A activity compared to 2018. The most noteworthy transactions were the acquisition of pulp producer Svilocell by Piper Invest for a reported 70 million euro and the acquisition of the producer of power transformers and tap changers Hyundai Heavy Industries Co. Bulgaria by SverdlovElektro Group for a consideration of 24.5 million euro.

Real estate is another active industry. Interest remains high in the hotels segment where acquisitions accounted for almost half of the announced transactions in the past 18 months. These include the acquisitions of Victoria Palace Hotel in Sunny Beach by S.B. Royals Hotels for a consideration of 50 million euro and Grand Hotel Plovdiv by a private investor. Another notable deal is that for the Telus Tower in Sofia by NBG Pangaea Real Estate Investment Company for a reported 78.6 million euro.


In 2019 and the first quarter of 2020, Romania was again among the fastest growing economies in the EU but the global COVID-19 pandemic is expected to bring about a 6% contraction of the economy. Although still too early to tell a complete story, economic activity at the end of the first half of the year was on the path to a gradual recovery.

The Romanian M&A market dynamics remained robust in 2019 with total deal volume estimated at around 4 billion euro and the number of announced transactions at more than a hundred. Some of the sectors that gained momentum in terms of M&A were technology, media and telecom, banking and real estate. The headline-grabbing announcements include the acquisition of Central European Media Enterprises (CME), a WarnerMedia majority-owned company, by PPF Group, a global and diversified financial investment and holding company, in a regional deal with total transaction value exceeding 1.5 billion euro; the takeover of Banca Romaneasca, a National Bank of Greece subsidiary, by Eximbank for an estimated 300 million euro; the acquisition of Adeplast, a leading provider of products for the construction sector, by Sika, a construction materials and adhesives producer, for an undisclosed consideration; and the sale of the 171 MW wind park portfolio owned by Vestas, the Danish wind turbine manufacturer, to Ingka Group, the owners of Ikea, for a total consideration of 136 million euro.

In the real estate sector, AFi Europe acquired NEPI-Rockcastle’s portfolio for an estimated consideration of 300 million euro.

Furthermore, a fair amount of private equity-sponsored M&A activity contributed to a diversified local M&A landscape. Some noteworthy mentions here include Innova Capital’s acquisitions of eye care retail networks optiBLU and Optiplaza; the sale of Sano Vita, an online store for natural seeds, nuts and snacks, by Highlander Partners; Abris Capital’s acquisitions of Dentotal Protect, a supplier of dental equipment, and IT GTS – Global Technical Group, a technology integrator.

M&A activity in 2020 is expected to be dominated by transactions in the energy sector. ENEL and CEZ commenced the sale of their Romanian operations in 2019 and state-owned enterprises such as Electrica, Hidroelectrica and SAPE have announced plans to participate in these sale processes. Expected government support schemes for the renewable energy sector and increased access to financing are further boosting interest in RES deals. We also see a wider buyers universe from non-traditional investors driven by the anticipated Green Deal and a further focus on RES and reduced CO2 emissions.

Like elsewhere in the region, the global COVID-19 pandemic put on hold most sale talks and processes. The first quarter saw 20 deals announced (of which only four were concluded) for a total of 650 million euro, higher when compared to the first quarter of 2019. The major deals in this segment were the regional acquisition of G4S cash operations in 17 markets including Romania by The Brink’s Company, a global private security and protection company, and CPI Property Group’s acquisition of a minority stake in Globalworth. However, the end of June brought a revival of sale talks. CEZ is headed towards exclusive discussions with Macquarie, the global infrastructure fund, while Teraplast, a Romanian metal window and door manufacturer, announced the sale of its steel division to Kingspan Group, the global building materials company, for an undisclosed amount. Other deals in the energy and banking sectors remained on hold or have been cancelled altogether (e.g. ENEL reconsidered its intention to exit Romania).

Romania’s M&A scene is expected to remain volatile in 2020, despite positive signs. Local and regional private equity funds have sufficient capital to deploy and are actively looking at opportunities but deal values and multiples for future transactions remain difficult to predict.


The stable Croatian economy in 2019 was the backdrop for an active M&A market, exceeding 40 disclosed deals with combined reported value of over 500 million euro, including the acquisition of Tele 2 by United Group and the acquisition of Liburnia Riviera Hotels (LRH) by Gitone, each exceeding 200 million euro. The LRH deal confirms the importance of the real estate sector where significant deals were recorded in the past in the tourism and shopping mall segments. In the forthcoming periods we expect further activity, especially in tourism.

On the privatisation front, the repurchase of MOL’s stake in INA is still on the government’s agenda, but not a top priority as budget deficit problems due to the weak tourist season have taken central stage.

The development of the manufacturing segment is marked by Rimac Cars’ continuous effort for re-capitalisation which resulted in the entry of Hyundai/Kia Motor Group with 80 million euro. The company has attracted some 150 million euro of investments into Rimac Cars and Greyp Bikes.

In the FMCG sector, the largest Croatian confectionery producer Kras experienced a bidding war for the controlling ownership package between two of its owners, which ended with a 38 million euro transaction for the successful bidder. Another major transaction was the acquisition of Mlinar by Mid Europa Partners and the exit of Atlantic from its sports and functional food division.

Infobip successfully closed its first round of funding, securing some 200 million euro from One Equity Partners in a deal which implies valuation of over 1 billion euro.

Croatia also sees consolidation trends in the energy sector where Slovenian company Petrol acquired the LPG business of Crodux Group, and HEP acquired the gas distribution business of PPD. However, activity in the wind energy sector significantly slowed down, with a shift from wind to solar and geothermal energy. One reason for this is that the state is working on a change of feed-in models for renewables.

Covid-19 put the brakes on the M&A activities in the beginning of 2020 but no transactions were cancelled. The economy is showing signs of recovery, but the lockdown coupled with weak tourist season is expected to result in 8.5% GDP drop.

Furthermore, market signals indicate that larger groups will start to divest non-core operations to consolidate balance sheets due to a significant drop in profitability, impacting significantly the ones with high leverage. Expected valuations are hindered by profitability drop, probably leading to wider use of earn out clauses. Negotiations, management presentations and site visits are influenced by travel restrictions and strict corporate safety policies.


Slovenia’s M&A market remains very active, as it is backed by strong economic activity coupled with consolidation in banking, privatisations and strong interest on the part of private equities for this market.

The top deals include the privatisation of Abanka by Nova Kreditna Banka Maribor, a unit of U.S. investment fund Apollo Global Management for 444 million euro; the acquisition of Serbia’s Komercijalna banka by NLB; and the deal for NLB Vita, the second-largest life insurer in Slovenia, which was acquired by Sava Re. Intereuropa was acquired by the Slovenian Post that has now confirmed its position as a leading logistic company in the region.

The TMT sector continued to see significant activity. European IT infrastructure expert Conscia added to its portfolio NIL, an IT solutions provider with an enterprise value estimated at 40 million euro, and Austria’s S&T acquired telecom equipment producer Iskratel for 37 million euro.

The list of big deals includes Freudenberg’s acquisition of Filc, a producer of non-woven textiles and laminated materials; the 10 million euro deal for Casino Riviera, which was acquired by Austrian gaming group Novomatic; the acquisition of Semenarna Ljubljana by Agromarket, based in Serbia; and the acquisition of car parts retailer Bartog by its Croatian peer Tokic, now a regional leader in this segment.


The Serbian M&A market recorded a high number of transactions in 2019, but the country’s profile remains dominated, by only a few large transactions driven either by privatisations or, market exits. While the privatisation of large companies in infrastructure and mining falls behind, sold one of the largest landowners in Serbia – the agricultural conglomerate PKB with 17,000 hectares of land. The PKB transaction was finalised in late 2018 and PKB was sold to Al Dahra from UAE for 105 million euro.

Just before the onset of the COVID–19 crisis, the state successfully closed the privatisation of the largest Serbian bank – Komercijalna banka – which was acquired by Slovenia’s NLB for 387 million euro. Komercijalna banka was one of the largest retail banks in the region still available for privatisation, while Serbia’s market had been undergoing a consolidation process in the past few years.

The state also sold FAM, a lubricants producer, to Valvoline for 9.5 million euro, and the operater of the Port of Novi Sad to Dubai- based P&O Ports for 8 million euro.

Belgrade-based JAT Tehnika was sold to Avia Prime, a Czech company which is one of the key players on the European maintenance, repair and overhaul market in aviation.

Meanwhile, Mid Europa Partners finalised sale of Bambi, a confectionary company to Coca Cola HBC. They also sold Knjaz Milos, a major producer of mineral water and non-alcoholic beverages to a JV between Karlovarské Minerální Vody and PepsiCo, Inc. This leaves Mid Europa with a dairy producer Imlek in Serbia and its exit can be expected in the near future.

Swedish based NIBE Group acquired Gorenje Tiki from Hisense/Gorenje, and this deal was followed by the acquisition of Elektrotermija, as both targets are active in the electrical heaters segment.

Another notable deal was the acquisition of game studio Eipix Entertainment by Russian based Playrix, a producer of free-to-play mobile games.

The list continues with Paper Converting Machine Company acquiring another tissue producer – Stax Technologies, and Czech company UDI Resort taking over paint and varnish producer Duga as part of its real-estate development plans.

The structural reforms initiated in 2015 coupled with negotiations for EU accession resulted in growing interest by foreign investors and brought significant investments into Serbia. However, Covid – 19 slowed this process. Serbia’s GDP is expected to contract by an estimated 4% after severe traveling restrictions paralyzing the country for a couple of months.

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