RAEF: Romania has become a buyers' country

Horia Manda, senior vice president and chief investment officer of RAEF (Romanian-American Enterprise Fund), says the M&A market has been witnessing blockages caused by buyers' and sellers' expectations clash over the past eight months, while the decline

"I think this is a positive thing, because the acquisitions market had become overheated, which translated into the excessive and unsustainable increase in both real estate prices as well as stock and company prices (...)," Manda told ZF in an interview.
Manda coordinates the team at RAEF (a country fund dedicated to Romania) and the team at BAF, a fund present in states such as Bulgaria, Ukraine, Moldova and Albania, as well as West Balkan countries. The acquisitions he is set to seal through the two funds have been put at around 40m euros this year.
Manda believes that over the medium and long term, because of some problems such as infrastructure, Romania will become inefficient, while raw materials, energy and labour costs will rise.
As for the trend of the domestic M&A market in 2008, Manda is cautious. "I don't believe we will see a significant market increase. I haven't seen too many deals and the ones that were finished were started last year. Given the uncertainties related to the economic situation and elections, I wouldn't be too upbeat about a substantial increase in the M&A market," said Manda.
In 2005-2007, the domestic M&A market was boosted by extensive privatisations in the energy and financial service sectors and although his forecast is not upbeat on short term, Manda believes "we will see this market go up, in line with economic growth and the expected consolidation in many sectors".
The latest investments by the funds run by Horia Manda include Capa Finance and Industrial Access.
RAEF has also invested in a micro-pellet factory near Sighetul Marmatiei. "As for the latest deals sealed with the funds we manage, I believe they have the right value. As a rule, we have been reluctant to pay inflated prices in the acquisitions we make from the very perspective of certain concerns about possible changes in economic conditions or financial markets (...)," explained Manda.
Current M&A market conditions are favourable to buyers, unlike the situation witnessed over the past two years.
RAEF and BAF have stakes in eight firms in Romania, with a value that amounts to 42m dollars in the case of RAEF and 15m euros for BAF, as of June 30.