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Average value of deals down 78% in Q3

Average value of deals down 78% in Q3
28.10.2008, 17:57 4

The average value of deals sealed in the third quarter of 2008 dropped by 78% to 32m euros from 148m euros in the same period in 2007, although the number of deals doubled, according to the information provided by Raiffeisen to ZF.

"Amid deteriorating economic-financial conditions, we can see a clear trend of acquisitions shifting either to mature businesses, with a consolidated market position, or to relatively small businesses, but to sectors with a high growth potential, therefore deals of low values, with no need of leverage," believes Ioana Filipescu, managing director at Raiffeisen Investment Romania SRL.
In the third quarter of 2008, the domestic M&A market reached 975m euros, down 70% from the 3.3bn-euro level posted in the same period of 2007.
In July-September 2008 period, the sectors that witnessed the biggest number of deals were the financial one (7 deals with an overall value of 389m euros), real estate (10 deals of 310m euros, but down 58% from 2007) and energy (3 deals of 200m euros).
"Whereas in the third quarter of 2007, excluding the Rompetrol mega deal, strategic and financial investors shared almost equally the M&A market, in the third quarter of 2008 financial investors lost ground, with a 49% lower value compared with the same period of 2007, in the context where the number of signed deals rose from 9 to 15 and their share shrank to 38% from 49% in the overall market," explained Ioana Filipescu.
Nevertheless, in the first nine months of this year the domestic M&A market dropped by only 4.5%, from 4.87bn euros to 4.65bn euros.
As regards the countries the most dynamic investors in Romania came from, they are Italy, Austria, France and Germany.
The market thus registered a strong contraction after having soared by around 150% in the first six months compared with a year ago, hurt by the tighter access to banking loans and by the financial crisis that started spreading.
The head of Raiffeisen Investment Romania expects a gradual reduction in the number of deals sealed domestically, as a drop in deals done by financial investors can be already noticed.
On the M&A consultancy market, the idea of a decrease in the value of Romanian assets emerged as early as the beginning of 2008, but most investment fund representatives said they had not witnessed such a correction, yet.

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