M&A rebound leaves room to catch up

The number of Mergers and acquisitions rose by a third in Russia last year and the growth is expected to continue into 2011. However, the activity still hasn't returned to pre-crisis levels.

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According to a survey ordered by CMS, one for the leading European law firms in Russia, the M&A market grew to €51.92 billion in 2010 from €17.8 billon in 2009, as total deals climbed from 165 to 213.

David Cranfield, Partner at CMS Russia said positive dynamics would continue to see growth continue in 2011, without a boom.

“We’re expecting there to be more energy in the market than it has been. It’s certainly been running at about half capacity since the crash, but no huge increase.”

He added that research indicates that about 75% of the M&A market players expect more investment in 2011, with energy and mining sectors continue to take lead position and transportation also expected to see more activity, and media and communications firming.

“Energy and natural resources are always due to come across in surveys as the most active sectors. Interestingly, respondents say that transportation would be a big sector this year, which is a surprise. When you look at the market, you’ll see that there are a number of transactions, which are likely to come to that sector.”

“Also, 52% of respondents name technologies sector, Mass Media and telecommunications as potential centres of business activity in Russia.”

China is a key foreign investor in Russia, on the back of its demand for commodities. Other significant investors include Germany, Great Britain and the United States. However, Cranfield believes domestic players will dominate the M&A market 2011.

“The interest from Russian buyers will be higher than from foreign ones.”