Foreign acquisitions of Russian assets showed five year record (Reuters data)

In the first half of 2017 the volume of mergers and acquisitions of Russian companies by foreign investors set the record in the last five years. Western companies are accustomed to sanctions according to market participants.

The volume of mergers and acquisitions (M&A) with participation of foreign investors in the first half of the year amounted to $4.6 billion, according to the Thomson Reuters report. Compared to the same period last year this figure has almost tripled (a year ago it was $1.6 billion). According to Reuters, the volume of M&A transactions in the first half of 2017 is the largest over the same periods since 2012.

The top three banks-consultants on M&A transactions with Russian assets became Deutsche Bank, Morgan Stanley and “VTB Capital”. The German Bank has secured first place by participation in the deal of the Austrian group OMV buying 25% in Yuzhno-Russkoe oil and gas condensate field for $1.85 billion (sold by the company “Uniper”).

The leaders for asset purchases in Russia are companies from Austria. In second place is China (at the end of may the Chinese Fosun acquired 10% in gold miner “Polyus” for $887 million). 9% of shares in the same “Polyus” sold on the London and Moscow stock exchanges for more than $800 million was the largest deal with the Russian asset in the stock market in the first half of the year.

According to the General Director of “VTB Capital” Alexey Yakovitsky, the growth of mergers and acquisitions reflects not on the easing of the geopolitical situation around Russia, but the improvement of its economic prospects. “People are used to sanctions,” he concludes.

The total volume of M&A transactions in the first half of 2017 with the participation of both Russian and foreign investors, amounted to $7.5 billion (in early 2016 — $10.3 billion). A significant share of last year’s figure was taken by the transaction involving “Gazprom” buying its own shares from VEB for $2.02 billion

Reuters notes that in the banking environment there is no certainty that the growth in the volume of transactions involving foreign investors will continue, given the confrontational rhetoric between the U.S. and Russia in recent years. “A new normality is achieved. I’m not sure that we will witness some incredible growth [of volumes] up to pre-crisis levels”, — quotes Reuters the words of a senior employee of one of the largest investment banks in Moscow.

By the end of 2016, the volume of mergers and acquisitions involving Russian assets reached a three-year high of $39.2 billion (estimate by Thomson Reuters). Compared to 2015 year the figure rose to 77%. More than 70% of the total volume of deals made in the energy industry.


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