Stock Exchange corrections and the depreciation of the national currency against the euro are making Romanian companies cheaper targets for private equity funds, for which the year 2008 is heralded to be one with a flood of acquisitions.
"The overall sentiment of the investors towards the local market is a negative one, and the increased risk of investing in Romania results in a reduction in the price of Romanian assets. The market is dominated by funds in euros, therefore the depreciation of the RON against the euro is making acquisition targets in Romania 'cheaper'. Moreover, the Stock Exchange is on a downward trend, with funding through the Stock Exchange, i.e. exit on the Stock Exchange, is more difficult," said Francisc Bodo, investment director at private investment company GED Capital Investment, adding that for players in the private equity sector, the year 2008 is better for acquisitions than for exits.
His opinion is shared by representatives of another investment fund with extensive operations on the Romanian market, Advent International.
"2008 will most likely be a year of takeovers, because we anticipate the sellers' expectations on the companies' value and outlook will adjust, dropping to much more realistic levels than of late," said Sebastian Tcaciuc, director of Advent International.
Private equity funds invested a total of around 250 million euros last year on the local market, with the rather high price of Romanian companies slowing down the advance of private equity investments.
"The Romanian market is one of the toughest in the region from the standpoint of an investor in private equity, because players push the price of deals very high," according to Robert Luke, a member of the European Private Equity and Venture Capital Association. Most investment fund representatives see the Romanian entrepreneurs' expectat
