M&A market in Russia 2016: Trends and opportunities

Transcription

1 M&A market in Russia 016: Trends and opportunities

2 Russian M&A market in 016 general overview Key factors affecting the market M&A completed transaction size dynamic, US$ bn Due to deterioration of Russian ruble transactions value become less costly and more attractive for international players Technology transfer Investments to international companies with access for technology needed Forecasts figures for 016 are in line with П 3 Import substitution programs Different import substitution programs are in place, making an impact on import business and changing the current industry landscape GR associated risks Market is still generally affected by hostile regulatory procedures and upcoming law incentives ( e.g. Media holding stakes law) Russian M&A Market is at recovery stage, despite the activity level is still affected by macroeconomic situation Transactions during 1H016 were executed on domestic market mostly with both buyer and seller assets located in Russia the domestic transactions segment is 81% of all transactions completed (both in numbers and value) There were 9 transactions with total deal value of US$. bn. with Russian assets involving international investors during 1H016 More than 0% of the transactions with international investor involved were executed with assets, located outside Russia (but Russian owned) Continuous trend for average transaction value decrease the average deal value (with largest of US$ ~1 bn. deals excluded) is US$4 mn.

3 Russian M&A market in 016 expectations and trends Trans-border investments Total transactions numbers for the international investments to Russian assets Oil&Gas Telecom Construction Agriculture Consumery goods Transport and Infrastructure Innovations Russian investments abroad Transactions with Russian assets 3 Banking and Finance Expectation and trends Concentration on core assets More and more investors concentrates on a mid and low size cap (up to US$ mn) assets transaction. The main goal is to increase core assets, make an optimization and securitization of costs, and execute vertical integration Non core assets separation Investments portfolio or group businesses are under optimization processes, by separation of non core assets to independent entities. That results in a changing of investment focus to a local companies, including distressed one Private equity funds role increase Due to an access to international capital, private equity increase activity and role, while traditionally active strategic players hold down M&A activity International investments role increase Despite the negative impact of economic stagnation and political decisions, the current situation on Russian market provides a good potential opportunities for international players. We expect an increase of trans-border deals numbers in different industries. 3

4 Russian investments to global market Safe vault for assets Making money work in conservative segments: E.g. Commercial real estate Technology Transfer Investments to international companies with access for technology needed Global Growth Platforms Acquisition of public listed international companies by state owned entities for further front-office purposes (e.g. Uranium One) Vertical Integration Obtaining synergies through increase of the conversion stages owned State owned companies Strategic players HNWI Markets Diversification Due to deterioration of Russian ruble hard currency markets are of a great interest 4

5 International investments to Russia Opportunities: Due to deterioration of Russian ruble transactions value become less costly and more attractive for international players. It also provides a good possibility for debt restructuring Threats GR associated risks Market is still generally affected by hostile regulatory procedures and upcoming law incentives ( e.g. Media holding stakes law) Domestic market recovery Despite the current recession, a lot of investors believe that domestic market will recover the demand (e.g. Leroy Merlin expansion) It is hard for investor to receive the necessary rate of return in hard currency A lot of blue ocean opportunities High profitability of projects, which crates not only something interesting and potentially profitable, but to projects which transforms the core principles of the industry Luck of transparency Most of the assets in midmarket have a problems with taxes, titles, business-models etc.