M&A in Emerging Europe set to increase
2014 could be a bumper year for mergers & acquisitions in Emerging Europe driven by a reinvigorated private equity sector keen to snap up under-valued targets in the region, according to a new report.
Emerging Europe: M&A Report 2013/14, published by law firm CMS and DealWatch, highlighted that M&A activity in Emerging Europe in 2013 essentially remained flat in terms of deal volume. But it anticipates a steady increase in deal flow this year.
In terms of the insurance sector specifically, there were 278 insurance and finance transactions last year compared with 275 in 2012 but a rise in this sector’s share of total value to 8.5 percent compared with 7.8 percent in 2012. This accounted for just short of €10 billion of deal flow.
Overall there was a moderate decline in deal value across all sectors, falling from €138 billion in 2012 to €112 billion in 2013.
The largest CEE insurance sector deal was made by Generali, whose €1.25 million deal to buy a minority stake from its joint venture partner PPF was the only such transaction in the region’s top 20 M&A deals during 2013.
The report said that private equity continues to view the insurance sector as attractive with M&A activity driven by this form of funding to a greater degree than most at least by number of deals. Some 30 insurance deals were private equity funded; second only to services which saw 58 such transactions taking the PE path. The largest deal by value was the sale of a 90 percent stake in Turkish health insurer Acıbadem Sigorta by middle eastern buyout group Abraaj Group to Malaysian investor Khazanah Nasional for €189 million.
“We expect 2014 deal-flow in CEE to be driven by increased appetite from foreign acquirers, followed by the availability of under-valued targets and private equity buyouts,” said Helen Rodwell, corporate partner at CMS. “On the sell-side, the biggest deal catalysts will be non-core asset sales, distressed M&A and exits by private equity funds reaching the end of their lifecycle.”
Radivoje Petrikić, also a corporate partner added: “CMS remains highly optimistic about deal flow in CEE in 2014. We believe the worst of the crisis is over and confidence is slowly returning to the market.”
