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Investing in CEE: Inbound M&A report 2022/2023
Meanwhile, the imposition of economic sanctions against Russia further complicated the dealmaking landscape. Against this backdrop, supply-chain bottlenecks and labour shortages, a legacy of the pandemic, continued to dampen growth.
Dealmaking conditions could scarcely have been more challenging. Yet, as our report reveals, the impact on M&A activity in the CEE region was much less pronounced than many initially feared. In fact – and with the exception of 2021, a somewhat anomalous record-year for M&A – deal volumes and aggregate deal value in 2022 both reached new highs in CEE.
The Czech Republic recorded a total of 81 M&A deals in 2022 with a declared value of €702m. The largest of these – and the CEE region’s fifth-biggest private equity deal of the year – was a €220m funding round for online grocer Rohlik Group. Among the various investors, led by Belgian firm Sofina, was the European Bank for Reconstruction and Development. Including this transaction, four of the five largest private equity-related deals struck in the Czech Republic fell in the technology sector.
Banking was another sector that saw significant activity in 2022. Much of this was a direct consequence of Russia’s invasion of Ukraine. Deals of note included the acquisition of Russian-owned Expobank CZ by the Czech Republic’s Banka CREDITAS. The year 2022 also saw the liquidation of the banking operations of Russia-backed Sberbank CZ following the revocation of its licence by the CzechNational Bank. Commercial bank Ceska Sporitelna acquired Sberbank CZ’s local loan portfolio in adeal worth €135m, making it the second-largest transaction in the Czech Republic last year.
Looking ahead, manufacturing, automotive and healthcare are sectors to watch in 2023. “We have local companies with good infrastructure in terms of manufacturing capacity and people, but their customer base is underperforming. This is
an opportunity for strategic investors to realise synergies with deals that focus on the asset rather than buying the current business,” says Lukáš Hruboň, Head of M&A at Mazars in the Czech Republic. “The healthcare industry also remains attractive because it is less exposed to external shocks.” The Czech National Bank has forecast that national GDP will contract by 0.7% in 2023 before expanding by 2.5% in 2024.
The region continues to offer unprecedented consolidation opportunities in the mid-market space in industries ranging from healthcare and tourism (sometimes together) to manufacturing and technology.
2023 will for sure be a challenging year. But set against this are the quality of the region’s businesses, the creativity of dealmakers and the continuing support of the EU’s Resilience and Recovery Facility, which is worth more than €100bn to the 12 CEE countries that are EU members. This, and the CEE region’s sound fundamentals, suggests there are good reasons to be relatively optimistic about the year ahead.
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