Zephyr Monthly M&A Report

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2 The following report details mergers and acquisitions activity in Russia/CEE in October 2015 using data from the Zephyr database. It focuses on deal activity by target company. Click here to access the raw data in an Excel spreadsheet. M&A value plummets in October There was a sharp decrease in the value of mergers and acquisitions (M&A) in Central and Eastern Europe (CEE) in October. Value fell 73 per cent from EUR 21,407 million in September to EUR 5,827 million in the period under review, the lowest result since March when deals worth EUR 4,113 million were recorded. Volume dropped 43 per cent month-on-month and 63 per cent year-on-year to 384 deals (September 2015: 678; October 2014: 1,043). In a 12-month comparison value also declined from EUR 16,879 million. Similarly, M&A targeting Russian companies also fell in October, with 122 transactions valued at a combined EUR 4,193 million announced over the four weeks, compared to 151 deals worth EUR 9,148 million in September. On a 12-month basis volume was 43 per cent lower than the 213 deals signed off in October 2014, while volume declined 66 per cent from EUR 12,273 million iover the same timeframe. Russian value in the month under review also represents the lowest result since March when just EUR 1,457 million was invested in the country. CEE deals by volume and value Announced date No of deals Oct ,827 Total deal value Sep ,407 Aug ,591 Jul ,482 Jun ,409 May ,351 Apr ,153 Mar ,113 Feb ,897 Jan ,765 Dec-14 1,164 28,209 Nov ,101 Oct-14 1,043 16,879 Page 1

3 Deals by volume and value 30,000 1,400 Deal value 25,000 20,000 15,000 10,000 5,000 1,200 1, Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 0 Aggregate deal value Number of deals Page 2

4 Russian deals by volume and value Announced date No of deals Total deal value Oct ,193 Sep ,148 Aug ,728 Jul ,503 Jun ,949 May ,708 Apr ,629 Mar ,457 Feb ,892 Jan Dec ,839 Nov ,315 Oct ,273 Page 3

5 Two deals top EUR 1,000 million Two transactions were valued at over EUR 1,000 million in October. The largest of these was a minority investment by VRN Sarl, which injected EUR 2,136 million into Russian gas production service holding company Novatek in exchange for a 9 per cent stake, increasing its total holding to 23 per cent. This single transaction accounted for 37 per cent of total M&A value in the CEE region in the month under review. That deal was worth almost double the region s second-most valuable transaction of the month. Naspers picked up a 51 per cent interest in KEKh ekommerts, an online classified-ad website operator, for EUR 1,080 million to take its share of the business to 68 per cent. There was a significant amount of investment from outside the region, with buyers from Luxemburg, South Africa, Germany and the UK involved in some of the top 20 deals by value in October. Primary sector leads by value The primary sector was the most valuable in October with EUR 2,350 millionworth of investments. However, this was represents a 66 per cent decrease on the EUR 6,929 million invested in the industry in September. Year-onyear value in the primary sector increased slightly from EUR 2,171 million in October Overall M&A value fell across all sectors with the exception of machinery, equipment, furniture and recycling, which was up from EUR 515 million in September to EUR 705 million in October, food, beverages and tobacco, which increased to EUR 392 million from EUR 29 million, and wholesale and retail trade (September 2015: EUR 215 million; October 2015: EUR 228 million). A similar result was seen in terms of volume as all industries declined apart from textiles, wearing apparel and leather, which was targeted in 9 deals compared to 6 in September, and post and telecommunications (September: 0; October: 1). Companies in the banking sector were the most frequently targeted in October with 57 deals. However, this was the lowest recorded result for the industry in the entire period under review. Page 4

6 Top 20 deals by value Deal value Deal type Target Target country Acquiror Acquiror country Deal status 1. 2,136 Minority stake increased from 15% to 23% Novatek OAO RU VRN Sarl LU 2. 1,080 Acquisition increased from 17% to 68% KEKh ekommerts OOO RU Naspers Ltd ZA Announced Capital Increase 100% Moskovskoe Mashinostroitelnoe Predpriyatie Imeni RU Obyedinennaya Dvigatelestroitelnaya Korporatsiya OAO RU Announced VV Chernysheva OAO Acquisition 100% Kofola SA PL Kofola CeskoSlovensko AS CZ Acquisition 100% Omnitel UAB LT Teo LT AB LT Announced IBO 100% Netretail Holding BV NL Rockaway Capital SE CZ Announced Acquisition increased to 100% UkrSybbank PAT UA European Bank for Reconstruction and Development II Announced Minority stake 4% Societatea Nationala de Gaze Naturale Romgaz SA RO Announced Capital Increase 41% OTP Bank PAT UA Announced Acquisition 65% Iota Devaisez OOO RU REX Global Entertainment Holdings Ltd BM Announced Acquisition increased from 84% to 100% Komineft PAO RU Lukoil-Komi OOO RU Announced Capital Increase 99% Universal Bank PAT UA Announced Acquisition 100% Balda AG's further operating business assets DE Heitkamp & Thumann KG DE Pending Acquisition 100% Gruppa Kronshtadt AO RU Sistema Aktsionernaya Finansovaya Korporatsiya OAO RU Acquisition 100% Antwerp Sp zoo XXXIV Sp ka's assets PL Terceira Sp zoo PL Acquisition increased to 100% Euroins Romania Asigurare-Reasigurare SA RO Evroins Inshurans Grup AD BG Announced Capital Increase 47% Vostochnyi Ekspress Bank PAO RU Announced Minority stake DublGIS OOO RU Baring Vostok Capital Partners Ltd GB Acquisition increased from 52% to 100% Zito dd SI Podravka dd HR Pending Capital Increase Cefarm-Wroclaw-Centrum Zaopatrzenia PL Przedsiebiorstwo Zaopatrzenia Farmaceutycznego Cefarm- PL Farmaceutycznego SA Warszawa SA Page 5

7 Top 20 private equity deals by value Deal value Deal type Target Target country General Partner/Fund Manager Deal status IBO 100% Netretail Holding BV NL Rockaway Capital SE Announced Minority stake DublGIS OOO RU Baring Vostok Capital Partners Ltd; ru-net Ltd 3. 1 Acquisition increased from 90% ecard SA PL MCI Management SA Announced to 100% 4. 1 Minority stake Funderbeam OU EE 3TS Capital Partners Oy; Rockspring Ltd 5. 1 Minority stake Hanzas Elektronika SIA LV Flycap AIFP SIA 6. 0 Minority stake TriggMine UA 7. 0 Minority stake MyGenetics RU 8. 0 Minority stake 7% Finbord RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo 9. 0 Minority stake 7% Vinteo OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Yurbyuro Onlain OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Page 6

8 Top 20 private equity deals by value (cont d) Deal value Deal type Target Target country General Partner/Fund Manager Deal status Minority stake 7% Zolotaya Kostochka OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Strategicheskhikh Initsiativ po Prodvizheniyu Novykh Proektov Minority stake 7% Sinteka OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Big Fish+ OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% MyGenetics RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Onlain Avtoshkola OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Laifstail Marketing OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Stirka-Glazhka RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Barter-Kard OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Analiticheskoye Agenstvo Scorista OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Minority stake 7% Vkusnadom OOO RU Avtonomnaya Nekommercheskaya Organizatsiya Agentstvo Page 7

9 PE investment in Russia declines Private equity (PE) investment activity targeting CEE-based businesses dropped 62 per cent by value as 36 deals worth a combined EUR 221 million were announced in October. While volume fell slightly from the 37 transactions recorded in September, value followed a similar pattern and declined from EUR 578 million in the previous four weeks. Volume strengthened year-on-year and the decrease in value was less evident as 32 deals reached an aggregate value of EUR 270 million in October PE targeting Russian companies climbed to 24 deals worth EUR 37 million in October, the highest result by value since July, when 7 deals were valued at EUR 41 million. Both volume and value were up month-on-month and year-onyear (September: 9 deals worth EUR 6 million; October 2014: 14 deals worth EUR 24 million). A single PE transaction was worth over EUR 100 million in October. The region s largest deal was Naspers agreement to sell its entire ownership in Netretail and Heureka to Rockaway Capital for EUR 182 million. Private equity deals by volume and value Announced date No of deals Oct Sep Aug Jul Jun May Apr Mar Feb Jan Dec Nov Total deal value Oct Page 8

10 Russian private equity deals by volume and value Announced date No of deals Total deal value Oct Sep Aug Jul Jun May Apr Mar Feb Jan Dec Nov Oct Page 9

11 Private equity deals by volume and value in CEE Deal value Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 0 Total deal value Number of deals Page 10

12 Deal types by volume in October Minority stake Acquisition Capital increase Demerger IBO MBO Merger Deal types by volume Deal type Oct-14 Sep-15 Oct-15 Minority stake Acquisition Capital increase Demerger IBO MBO Merger Deal types by value in October Deal types by value Deal type Oct-14 Sep-15 Oct-15 Minority stake Acquisition Capital increase IBO Minority stake 11,669 8,742 2,509 Acquisition 3,413 11,274 2,335 Capital increase 1, IBO Page 11

13 Target sectors by volume Target sectors by value Target sector Oct-14 Sep-15 Oct-15 Target sector Oct-14 Sep-15 Oct-15 Other services Banks Machinery, equipment, furniture, recycling Wholesale & retail trade Construction Primary sector Chemicals, rubber, plastics Transport Publishing, printing Gas, water, electricity Metals & metal products Food, beverages, tobacco Textiles, wearing apparel, leather Wood, cork, paper Insurance companies Education, health Hotels & restaurants Post and telecommunications Public administration and defence Primary sector 2,171 6,929 2,350 Other services 1,922 1,037 1,612 Machinery, equipment, furniture, recycling Banks 1, Food, beverages, tobacco Wholesale & retail trade Chemicals, rubber, plastics 48 1, Construction Insurance companies Transport 87 9, Publishing, printing Wood, cork, paper Metals & metal products 7, Gas, water, electricity Hotels & restaurants Textiles, wearing apparel, leather Education, health Post and telecommunications Public administration and defence Page 12

14 Top countries by volume Top countries by value Target country Oct-14 Sep-15 Oct-15 Target country Oct-14 Sep-15 Oct-15 Russia Poland Ukraine Latvia Belarus Bulgaria Romania Bosnia and Herzegovina Czech Republic Serbia Estonia Slovenia Hungary Croatia Moldova Lithuania Slovakia Macedonia Montenegro Albania Kosovo Russia 12,273 9,148 4,193 Poland 2,501 1, Ukraine 146 9, Romania Lithuania Czech Republic Slovenia Latvia Bosnia and Herzegovina Montenegro Bulgaria Serbia Belarus Hungary Estonia Moldova Macedonia Montenegro Slovakia Albania Kosovo Page 13

15 Notes to editors Activity is based on the activity of the target company Deal status is announced within the time period The sector breakdown uses targets activities as defined to be Major Sectors by Zephyr The Russia/CEE region covers target companies in Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia and Ukraine. The date range is 01/10/ /10/2015 inclusive Page 14