Deals of the year: Romanian M&A sector returns to growth – energy

Newsroom 17/12/2012 | 11:27

This year has seen notable M&A developments in energy, agribusiness, logistics and transport and retail, and deal-making has amounted to around EUR 1 billion. The market bounced back in 2012 and should continue this trend next year, sustained by the privatizations of state-owned firms and the existence of attractive investments in agriculture and renewable energy, say specialists.

The value of M&A registered in 2012 rose by 30 percent to around EUR 1 billion, almost evenly divided between domestic and foreign investors, according to Hein van Dam, partner in charge at Deloitte Financial Advisory Services. He added the second half proved to be the better for deal-making. The largest deals were concluded in e-commerce, IT, retail and agribusiness.

Specialist said M&A had increased against the background of a more stable macro-economic environment.

The market remained sensitive to the Euro zone crisis and the domestic political environment, but the appetite for acquisitions is still present, despite sluggish economic growth in the Euro zone, according to Radu Stoicoviciu, partner, leader of the transaction and management consultancy department at the professional services firm PwC Romania.

“Financial and strategic investors carefully and realistically plan their investment budgets and expansion/consolidation plans at a regional level, with potentially favorable consequences for Romania,” said Stoicoviciu. “The eventual macro-economic shortfalls may delay investment decision, but just temporarily.”

The difficult situation facing the Euro zone may actually represent an opportunity as long as investors perceive Romania as a country with good economic potential, which offers an attractive yield on investments, according to Mihai Zoescu, senior manager, advisory services, at the professional services firm KMPG. He reckons the political crisis has delayed some investments.

“We don’t think that investments have been cancelled due to the political environment, but it’s possible that certain investment decisions were delayed in the period prior to the elections,” said Zoescu.

The distressed Euro zone is Romania’s main trading partner, accounting for 70 percent of all exports, and Western Europe is the main source of foreign direct investments (FDI) in Romania, according to Hein van Dam of Deloitte.

“The deterioration in confidence across the Euro zone is clearly reflected in the dramatic decline in FDI which directly impacts the level of M&A activity,” said the Deloitte partner.

The M&A market is set to make additional gains in 2013, helped by Romania’s privatization program agreed with the IMF and the existence of opportunities in other sectors.

The privatization of state-owned companies such as post operator Posta Romana and petrochemical plant Oltchim, and the sale of minority stakes in other state-owned firms, could help the market move forward, according to Zoescu of KPMG. He sees additional growth potential in agriculture and renewable energy, where there is still a window of opportunity. Zoescu said deals could be struck between smaller players in the banking sector.

“The energy (including renewables) and resources sector continues to attract strategic investment while sectors such as IT and related businesses, niche manufacturing and services are among the sectors of interest to investment funds,” said Hein van Dam.

Stoicoviciu of PwC adds that transport and logistics are becoming an interesting sector for investors given that the economic recovery will boost trade and the demand for these services.

Romania still needs to work on creating an investment environment which can compete with other countries, regionally and globally, if it wants to increase its presence in the M&A market, according to the Deloitte partner.

“Romania’s share of regional M&A activity has declined in recent years as a clear divide has emerged between countries to the north such as Poland and the Czech Republic and those to the south such as Hungary, Romania and Bulgaria – largely reflecting investor concerns around macroeconomic stability and the perception of relative lower investment risk in Poland and Czech Republic,” said Hein van Dam.

Zoescu of KMPG said Romania ranks second in the region for M&A, behind the clear leader Poland.

Some of the largest deals signed this year have included the acquisition of Azomures by Ameropa Holdings and the purchase by Naspers of a controlling stake in eMagAuchan bought 24 Real hypermarkets as part of a cross-border transaction, while Innova Capital acquired a controlling stake in EnergoBit.


NIS Petrol buys four petrol stations in Romania

Value of transaction: Not made public

Legal team buyer: Tuca Zbarcea & Asociatii

Legal team seller: Not applicable

NIS Petrol, the local subsidiary of Russian Gazprom Group, purchased four petrol stations in Sibiu and Arad counties in mid 2012. The transactions were cleared by the Romanian Competition Council. The Romanian unit of Serbia’s Naftna Industrija Srbije (NIS) is controlled by Russian oil company Gazprom Neft. The company plans to operate 120 petrol stations in Romania by the end of 2014.


NIS Petrol buys stakes in petroleum concessions

Value of transaction: Not made public

Legal team buyer: Tuca Zbarcea & Asociatii

Legal team seller: Not applicable

NIS Petrol, the local subsidiary of Gazprom Group, acquired participations in various petroleum concessions, aiming to develop these oilfields in the coming year. The Russian company sees the Romanian upstream and downstream sectors as future growth areas, according to media reports.


Zeta Petroleum acquires Romanian subsidiary from Regal Petroleum

Value of transaction: around EUR 1 million

Legal team buyer: Tuca Zbarcea & Asociatii and Pinsent Masons (UK)

Legal team seller: bpv Grigorescu Stefanica

UK-based Regal Petroleum decided to sell its Romanian subsidiary to Zeta Petroleum, an independent oil and gas exploration and production company. Regal Petroleum Romani aheld a 50 percent non-operated interest in Suceava, northern Romania. Zeta Petroleum, based in the UK, has three prospecting permits covering 6,000 sqm in areas with hydrocarbon potential in Romania.


Renesola New Energy buys two Romanian photo-voltaic developers

Value of transaction: EUR 1.5-2 million – market estimates for Ecosfer Energy acquisition

Legal team buyer: Wolf Theiss

Legal team seller: Tuca Zbarcea & Asociatii

Renesola New Energy, the Romanian subsidiary of Chinese RenseSola Group. a global manufacturer of solar panels, entered the local market after fully acquiring the share capital of Lucas Est and Ecosfer Energy, two Romanian developers of photo-voltaic parks in Romania. The solar parks developed by Lucas Est and Ecosfer Energy have a project value of EUR 12 million and EUR 18 million.


Zeta Petroleum buys 40 percent stake in Jimbolia oilfield from Armax Gaz

Value of transaction: Not made public

Legal team buyer: Not made public

Legal team seller: Tuca Zbarcea & Asociatii

Armax Gaz, a Romanian equipment manufacturer for the oil and gas industry, sold its 40 percent stake in the Jimbolia oilfield to Zeta Petroleum, a UK-based oil and gas firm. Following the transaction, Armax Gaz held a 10 percent interest and Zeta Petroleum acquired 90 percent.


CET Iasi signs 20-year concession agreement with Dalkia Romania

Value of transaction: Not made public

Legal team CET Iasi: Tuca Zbarcea & Asociatii

Legal team Dalkia Romania: Lawyer Catalina Marcu

The municipality of Iasi signed a concession agreement with French company Dalkia Romaniacovering heat generation, transport, distribution and supply of thermal energy in the city of Iasi. The service will be provided by a joint venture between the contracting authority and French company Dalkia, which has to pay annual royalties to the municipality based on its turnover. The contract includes a 20-year concession of related infrastructure.


Linde Gaz Romania buys Oxigen Plus

Value of transaction: Not made public

Legal team buyer: Bostina & Asociatii

Legal team seller: Popovici Nitu & Asociatii

Industrial gas producer Linda Gaz Romania, part of the German Linden Group, acquired Oxigen Plus, the largest private healthcare oxygen provider in Romania, from a group of Cypriot investors. Linde Gaz holds 60 percent of the Romanian industrial gas market, which stands at EUR 160 million, according to company representatives. The firm estimated an increase of close to 5 percent in turnover, which reached EUR 100 million in 2011.


Eolenvest buys three wind farms in Braila

Value of transaction: Not made public

Legal team buyer: Popovici Nitu & Asociatii

Legal team seller: Not made public

Eolenvest, part of the French developer Filasa International acquired Wind Energy Power Trade, Wind Energy Advance Tech and Wind Energy strategy, three wind farms located in southeastern Romania, in Braila county, with total projected capacity of over 400 MW. Eolenvest had previously bought another 110 MW wind farm, and was also advised by Popovici Nitu & Asociatii.


SHV Group sells local LPG business to Ade Gas Oil Company

Value of transaction: Not made public

Legal team buyer: Not made public

Legal team seller: Popovici Nitu & Asociatii

Dutch SHV Group, a leading distributor of liquefied petroleum gas (LPG), sold its local business to Ade Gas Oil Company, marking SHV’s exit from Romania. This came three years after the acquisition of Crimbo LPG cylinder business, developed by the Romanian businessman Cristi Borcea.


Marguerite Fund and EnerCap Power Fund buy stakes in 80 MW Chirnogeni wind farm

Value of transaction: Not made public

Legal team buyer: Salans

Legal team seller: Not made public

European Marguerite Fund and the Prague-based private equity fund EnerCap Power Fund acquired 50 percent and 30 percent stakes in an 80 MW wind farm in south-eastern Romania from the Cyprus-based developer EP Global Energy, which kept a 20 percent stake. This was the first investment inRomaniafor the two funds.


STEAG buys 108 MW wind farm in Constanta

Value of transaction: Not made public

Legal team buyer: PeliFilip

Legal team seller: Salans, Biris Goran – co-legal advisor

Romanian wind developer Monsson Group sold the Crucea North wind farm in Constanta, with an installed capacity of 108 MW, to STEAG,Germany’s fifth biggest electricity provider. The German utility firm is set to invest around EUR 200 million in the newly acquired farm.


GDF Suez buys first wind project in Romania

Value of transaction: Not made public

Legal team buyer: Salans

Legal team seller: Not made public

French utility firm GDF Suez, a supplier of gas and electricity in Romania, has acquired a 48MW wind farm in Braila county, which should become fully operational by end-2012. The law firm advised the utility on real estate matters, the turbine supply and long-term maintenance agreements.

Genesis Partners fully acquires three wind developers

Value of transaction: Not made public

Legal team buyer: Wolf Theiss

Legal team seller: Not made public

Genesis Partners SRL fully purchased Romanian companies Renewable Slobozia Nord, Reewable Slobozia Est and Renewable Slobozia Vest, which are developing three wind projects in Giurgenu, Ialomita county, with a combined installed capacity of EUR 300MW. The projects are worth EUR 600 million.

Lukerg buys two local wind projects

Value of transaction: Not made public

Legal team buyer: Wolf Theiss

Legal team seller: Schoenherr

Lukerg, a joint venture between Russian Lukoil and Italian ERG Renew, has acquired a 108 MW wind park and a multi-cluster wind farm project of 84 MW in the proximity of Tulcea county. The project is valued at EUR 168 million.


Arrina Development fully sells issued shares to Lux Renewable Holdings 2 and Best Wonder Business

Value of transaction: Not made public

Legal team buyer: Cumpanasu & Dejescu

Legal team seller: Wolf Theiss

Four Romanian individuals sold 100 percent of the shares issued by Arrina Development SRL, a project company developing a 75 MW photo-voltaic project, to Lux Renewable Holdings 2 fromLuxembourgand Best Wonder Business fromSpain, both affiliates of Quercus Investment Partners, an asset management company specialized in renewable energy infrastructure investments. The project is valued at EUR 150 million.


Hareon Solar develops 20 MW photo-voltaic projects in Romania

Value of transaction: EUR 34 million

Legal team buyer: Schoenherr

Legal team seller: Not applicable

Chinese Hareon Solar and Italian developer ESPE set up a joint venture for the building of up to seven photo-voltaic parks in Romania, totaling 20 MW in capacity. The parks will be sold to institutional investors in early 2013, when they become operational.


Crimbo Gas International acquires Petrom LPG

Value of transaction: Not made public

Legal team buyer: Poppa & Associates

Legal team seller: Schoenherr

Oil and gas producer Petrol sold its liquid petroleum gas business to Crimbo Gas International, marking the exit of Petrom from the bottling and distribution market. Petrom will continue to produce LPG and sell gas cylinders and auto gas through its filling stations. Crimbo will receive gas from Petrom’s refinery and supply cylinders and auto gas to OMV Petrom. OMV Petrom’s net profit fell by 27 percent year-on-year to EUR 190 million in the third quarter.


Oltenia Energy Complex set up

Value of transaction: Not made public

Legal team for Romanian state: Bostina si Asociatii

Legal team seller: Not applicable

The Romanian government approved in October 2011 the creation of the Oltenia and Hunedoara Energy Complexes. The Oltenia complex was formed through the merger of SNLO, CE Turceni, CE Rovinari and CE Craiova, whose power generation assets represent 30 percent of the market, while holding most of the lignite resources. It has a market value of EUR 1 billion.


Rovinari Energy Complex tenders 500 MW energy group

Value of transaction: Not made public

Legal team for Rovinari Energy Complex: Bostina si Asociatii

The Rovinari Energy Complex selected a private investor for the setting up of a project company that will build a new energy group of 500 MW at Termocentrala Rovinari, which requires a EUR 1 billion investment under a public-private partnership regime. The negotiation commission selected the Chinese firm Huadian Engineering for this project.


Termoelectrica spins off business

Value of transaction: Not made public

Legal team for Termoelectrica: Bostina si Asociatii

Termoelectrica ended up with the Borzesti and Doicesti power plants, and with CET II Oradea and CET Ianca, following the spin off. Electorcentrale Grup is the new company that has taken over the thermal plants in Braila and Galati. Utilities E.ON and Enel are planning to develop new power production assets in these cities.


Innova Capital and EBRD buy stakes in EnergoBit Group

Value of transaction: EUR 65 million – market estimates

Legal team buyer Innova Capital: Clifford Chance Badea SCA

Legal team buyer EBRD: CMS Cameron McKenna

Legal team seller: D&B David and Baias

Central European private equity fund Innova Capital acquired a majority stake in the EnergoBit Group, a Romanian supplier of services and equipment for electrical networks to the power sector, for an undisclosed sum. The EBRD also bought a minority stake in the company. As a result of the deal, Innova Capital became the largest shareholder with a controlling stake of 52.8 percent.


Erkevi, VEK Holding and ACIS Benzinkuttechnika sell shares in ACIS Petrolservice

Value of transaction: Not made public

Legal team buyer: RTPR Allen & Overy

Legal team seller: Bulboaca & Asociatii SCA, Szecskay Attorneys at Law

Erkevi, VEK Holding and ACIS Benzinkuttechnika carried out a cross-border deal, which also included the sale of their stakes in ACIS Petrolservice, the ACIS’s group company in Romania, active in the field of gas station constructions, maintenance and technology installations for gas distribution stations. It was a cross-border transaction covering four jurisdictions:Hungary,Romania,SerbiaandBulgaria.


Hidroelectrica selects IPO intermediary syndicate

Value of transaction: Not made public

Legal team for Hidroelectrica: Zamfirescu Racoti Predoiu

State-owned Hidroelectrica, the largest hydro-power producer in Romania, selected the intermediary syndicate to handle the listing of the company on the domestic stock exchange. The consortium is comprised of BRD, Citigroup Global Markets Limited, Societete Generale and SSIF Intercapital Invest.

Ovidiu Posirca –

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