The fifth Baltic M&A and Private Equity Forum took place on 6-7 November in Vilnius, branding itself as the “must-attend” annual event for M&A and private equity market players in the region.
Attended by more than 230 participants, the Forum once more proved to be a valuable venue for sharing the latest market trends, networking and discussing business opportunities. One CEE private equity fund manager mentioned to organisers that he meets as many as seven potential targets during these two days!
Even though the event started with discussions on geopolitical tensions in the region (with a keynote speech by Quentin Peel ofThe Financial Times setting the tone), participants and speakers demonstrated cautious optimism towards prospects for the industry. For example, a poll of participants showed a majority considering that the Ukraine-Russia conflict has had only a slightly negative effective (55%) or no effect (27%) on M&A activities in the Baltics to date. This cautious optimism was apparently fuelled by the strong resilience of the Baltic economies – even after announcement of Russian sanctions in early August, the Baltic economies remain among the fastest growing in Europe (estimated growth of GDP for Lithuania in Q3 2014 compared to 3Q 2013 was 2.6%, for Latvia 2.2% and for Estonia 2.1%).
It was several times noted that the Baltics are a promising region for private equity and venture capital. Inspired by Jeremie, the Baltic Innovation Fund and other pan-Baltic initiatives, regional and local PE and VC funds continue to build up their portfolios in pursuit of “Baltic pearls”. Local start-ups such as Vinted, YPlan, TransferWise, CGTrader and others already demonstrate that ideas generated in the Baltics may be spotted by VC scouts and attract “big name” investors from all over the world. The European Investment Fund also estimates that its Baltic initiatives alone should generate some 20-25 transactions annually over the next five years.
Many speakers and panellists stressed the need to further strengthen cooperation and consolidation between the Lithuanian, Latvian and Estonian M&A and PE/VC industries. One speaker noted that taken together the Baltics are nearly of the size of New York, so if the Baltic PE/VC and capital markets develop well, the Baltics have solid potential to surprise the world with the next “skypes”.
An important aspect emphasised at the Forum was successful exits by Baltic investors. A good example was the recent sale of GrabCAD (an open engineering company originating in Estonia) to Nasdaq-listed Stratasys. Speakers shared the view that such Baltic success stories bring the entire Baltic PE/VC industry to a new level as well as helping to raise new funds for the region. Several other interesting case studies were presented – PZU’s acquisition of RSA operations in the Baltics, Linas Agro’s acquisition in Latvia, major M&A deals in the video games industry, and others.
This year’s Forum featured the first Baltic M&A and Private Equity Awards. The first Annual Achievement Award for the Baltic Private Equity & Venture Capital Industry, established by the European Investment Fund, went to Swedbank Investment Management for their active contribution to the development of the Baltic PE and VC industry. PZU’s acquisition of RSA Baltic operations was named the Baltic M&A Deal of the Year 2014 and the above-mentioned exit by the co-founder and angel investor from GrabCAD was awarded as the Baltic PE/VC Deal of the Year 2014.
In line with existing tradition, next year the Forum will move to Tallinn, thus continuing its dedication to developing the Baltic M&A and PE/VC community. See you in Tallinn next autumn!