In the coming five years there should be more than 200 million euros of new growth capital that will be seeking investments into the growing Baltic companies, according to Aare Tammemäe, the Senior Partner of Redgate Capital and the Chairman of the Board of FinanceEstonia.
„It is difficult to talk about long-term trends in the small Baltic market, but the growth of transaction activity reflects the real growth of companies’ economic activity and increased courage for dealing with risks,“ said Tammemäe regarding the transactions on the M&A market.
This trend is expected to continue, and in 2014 and subsequent years new investors will come to the Baltic market, such as private equity funds that are initiated by the Baltic Innovation Fund program. „In the forthcoming years, there should be more than 200 million euros of new growth capital in the form of private and venture capital which will be seeking investments into the growing Baltic companies,“ said Tammemäe. “As there is still not enough public (stock exchanges) and private equity offerings, strategic buyers will still dominate in the transactions of purchase and sale.”
As a new trend, Tammemäe sees that the companies will be able to finance themselves more and more through various bonds, where investors are mainly wealthy private persons and local fund investors. „It will be fostered by low interest rates and growing savings. All in all, strategic buyers will dominate the M&A market, but there will be increased amount of capital offerings through private capital and bonds, which should be a good news to Estonian entrepreneurs,“ commented Tammemäe.
He also added that in 2014 financial investors will continue exiting from portfolio investments (e.g. Askembla fund, Amber Trust) and the continuous investments (e.g. BaltCap) in the companies owned by funds will go on.
„It will give a chance to local investors, including the management, to buy a way into the companies. Through the new private equity funds that are coming to the market (with the help of BIF), it will be possible to buy new businesses,“ mentioned Tammemäe. „The amount of commercial real estate transactions, where big centers or entire regions (e.g. EfTEN, Mainor Ülemiste) are being bought or developed, is continuously increasing. It will be an active year in the field of purchase and sales of companies.“
The amount of takeovers of the companies increased considerably in 2013 compared to 2012, and reached the level of 2011, where all three markets had a sharp increase. Last year there were 57 different transactions that amounted the total of 3.66 billion euros.
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