Perry V. Zizzi: Reflecting on 2023 – Challenges Faced and Future Opportunities Unveiled

Business Review discussed with Perry V. Zizzi, Managing Partner of Dentons Romania, about 2023, a year marked by its challenges and unforeseen hurdles, while exploring the opportunities that lie ahead on the horizon.

How was 2023 for Dentons team in Bucharest?

Despite challenging market conditions, which included the escalating crisis in the Middle East, the war in Ukraine, the energy crisis, and the ongoing post-pandemic inflationary period, 2023 has been one of growth, resilience, and unwavering commitment to our clients.  The legal landscape in 2023 has been marked by many challenges, and we have helped our clients navigate the complexities of the rapidly evolving regulatory environment.

It was a good year for our operations in Romania, as we remained active across all major sectors and practices, participating in transactions of significant importance in both the Romanian and Central and Eastern European markets.

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Our achievements were underscored by several prestigious awards we received this year, including “Romania Law Firm of the Year” and “Central and Eastern Europe Law Firm of the Year” at the Chambers Europe Awards 2023.   Additionally, Dentons received the “Deal of the Year in Romania” award at the 2023 CEE Legal Matters Awards for advising SNGN Romgaz on its acquisition and acquisition financing of the ExxonMobil subsidiary that owns 50% of the Neptun Deep project in the Black Sea. We also received “Deal of the Year in Serbia” for advising the banks on a €155 million loan to MK Group and ALFI Green Energy Fund to finance the Krivača wind farm.  Finally, we were awarded “Equity Capital Markets Legal Advisor of the Year” at the Bonds, Loans & ESG Capital Markets CEE, CIS & Turkiye Awards on the strength of our work on the Hidroelectrica IPO and other key deals in the CEE region.

What are the most important mandates your team worked on this year?

Our greatest achievements lie in the success stories of our clients. Throughout the year we have been privileged to play a pivotal role in helping clients overcome legal obstacles, secure favorable outcomes, and achieve their business objectives.

We advised Hidroelectrica on the largest IPO in Romania to date and the largest in Europe in 2023. This long-awaited transaction, led by our Head of Capital Markets, Loredana Chitu, was a landmark deal, not only within the Romanian market but also on a European and global scale. Our Capital Markets team also advised CEC Bank on the establishment of its €600 million EMTN Programme and first three issuances.

We assisted the founders of the BMF Grup on the sale of a majority stake in the company to the private equity fund SARMIS Capital. This is the largest investment in the facility management industry this year in Romania.

We assisted a syndicate of lenders on a €450 million credit facility to AFI Europe group companies for the purposes of refinancing their Romanian shopping center portfolio in Bucharest, Brasov and Ploiesti. This transaction represents the largest real estate credit facility granted in Romania to date.

We advised NEPI Rockcastle on  €200 million green, real estate financing from Erste Group Bank AG and Raiffeisen Bank SA.

We advised Ursus Breweries in negotiating a Virtual Power Purchase Agreement with Enery.

Our Litigation team successfully assisted a multinational software company in a €11 million public procurement litigation in Romania related to a tender for hardware and software.

Could you share insights into the key practice areas that have proven particularly lucrative for the team in Bucharest?

As Romania continues to attract foreign direct investment, our firm has been actively involved in facilitating mergers, acquisitions, joint ventures, and corporate transactions. We anticipate this trend to persist, especially given the dynamic and competitive local business environment. Notably, we’ve been most active in M&A transactions in the energy, technology and agriculture sectors.

In addition to M&A, our Banking and Finance practice has excelled, serving both borrowers and lenders, and our Capital Markets team has gone from strength to strength. Our achievements have extended to areas like white-collar crime, compliance, competition, and employment law.

Furthermore, our Technology team has experienced substantial growth. With Romania nurturing a thriving tech ecosystem, companies are seeking our advice on matters related to licensing, data protection, and compliance. We’ve been at the forefront of advising clients in these fields and anticipate a sustained demand, given the continuous advancements in technology.

Lastly, we’ve made significant contributions in dispute resolution and arbitration. Our expertise in this area has been instrumental in assisting clients in navigating complex legal disputes. Given the intricacies of international business transactions, we expect a continued need for dispute resolution services.

How do you anticipate practice areas or industries evolving in the near future in response to market trends and client needs in Romania?

According to the recent Economist Intelligence Report, ‘Europe Outlook 2024,’ there are positive indicators for business environments in both Western and Eastern Europe. Notably, Romania and Croatia have been identified as stronger performers in Eastern Europe. This optimism prevails, though somewhat tempered during the final quarter of this year. Nonetheless, the trend of “friend-shoring” – i.e. relocating production to countries that are not perceived as actual or potential geopolitical threats – will continue to benefit Romania, which as a member of both NATO and the EU offers investors a high degree of stability.

The most attractive sectors for cross-border M&A in the near future, as perceived by investors, are energy (especially renewables), technology, media and telecommunications.

Additionally, we foresee growth in industries such as manufacturing, security and infrastructure.

Environmental, social, and governance (ESG) concerns have gained significant prominence. Companies are becoming increasingly conscientious about their environmental and social responsibilities, resulting in a surge of clients seeking legal counsel in this area. We anticipate this trend will continue to strengthen as regulatory frameworks evolve, and clients prioritize sustainability and ethical practices.

The one area of concern that keeps us awake at night is Romania’s introduction of EU-mandated FDI restrictions. Romania has gone beyond the intent of the EU legislation, which focused on allowing member states to introduce measures to protect national security, whereas the authorities in Romania have expanded the mandate to in essence include consumer safety. With a quite low EUR 2 million threshold for review, and even EU buyers required to be approved, I fear that investors are being sent a signal that doing business in this country is getting increasingly bureaucratic and excessively regulated.

Corporations are placing a stronger emphasis on diversity and inclusion. Could you please provide more details about your firm’s initiatives in this area and explain how they contribute to fostering a more inclusive and diverse business environment in Romania and beyond?

Dentons is actively engaged in the community. As one of the founding members of the Romanian Diversity Chamber of Commerce (RDCC), Dentons has played a pivotal role within the organization since its inception. Throughout 2023, members of Dentons’ Bucharest office — including Andrei Vartires, Argentina Rafail, Andrei Marinescu, Stefi Ionescu, and myself — have been actively involved, providing essential legal support for the RDCC’s daily operations.  We also participated in several RDCC events organized this year, including the Equality, Diversity & Inclusion Eastern Europe Conference, Purple Night, and Romania Accessibility Awareness Day Conference.

Furthermore, we have continued our Unrevoked 18.0 project, collaborating with United Way Romania to fund a program designed to empower youths in state care. This program offers vocational training, counseling, and exposure to the business community, ultimately assisting these young individuals in finding employment or pursuing further education and ensuring a successful transition to adulthood.

What are Dentons’ plans for 2024?

We view 2024 as an opportunity to foster sustainable growth in our business. This entails adapting to emerging trends in diversifying our legal services and enhancing our offering. Our unwavering dedication to innovation, diversity, and social responsibility will continue to be our guiding principles as we navigate the dynamic legal landscape. Both our team and our clients remain our top priorities.

We maintain a positive outlook for the future and are actively exploring avenues to expand our service portfolio, optimize operational efficiency, and nurture the enduring partnerships we have cultivated over the years. Our commitment to delivering an exceptional client experience, characterized by excellence, responsiveness, genuine care for our clients’ interests, and a pragmatic, business-oriented approach to legal counsel, remains steadfast.