Defensive, non-cyclical sectors such as technology and telecoms, food processing/consumer products, utilities, energy and infrastructure continue to attract investor interest and are likely to dominate activity in 2H20, dealmakers said.

TMT

Major TMT transactions in 2H20 include the disposal of telco towers operator Polkomtel Infrastruktura (PI). PI’s parent, Cyfrowy Polsat media group, could itself end up on the block in the longer term as a consequence of founder’s succession.

Poland’s vast, outsourced IT services sector is also ripe for consolidation, with a host of mid-sized, founder-owned players presenting a platform-building opportunity for sponsors. Cornerstone Partners (CP)-backed Avenga (IT Kontrakt) is one such target.

Energy

Healthy levels of activity are also expected in the solar, onshore and offshore wind sectors. These are assets that are attracting investor interest due to stable cashflows and the ongoing switch from conventional to green energy.

There is also expected to be more companies selling non-core central European assets so that they can focus on other geographies or raise cash from divestments, several bankers said. The sale of energy company innogy’s Czech retail assets, delayed by several weeks due to COVID-19, is an example of this, as well as the sale of brewer Molson Coors‘ central European assets which has been mooted to kick off towards year end.

Infrastructure

Infrastructure-related sectors are widely seen as resilient in the face of economic turbulence and are therefore a safe investment. The potential sale of Finnish Fortum’s Polish and Baltic district heating assets is among the largest situations to be watched in 2H20, several dealmakers said. An IPO of the Lithuanian state-owned energy group Ignitis is another sizable situation possibly slated for the autumn. Enefit Green, a renewables subsidiary of Estonian state-owned Eesti Energia, could also go ahead with an IPO this year.

e-Commerce

The technology space is another hot M&A area in the Baltics, polled bankers and lawyers said. In this sector, the e-commerce segment has the largest potential for dealmaking. This is due to growing revenue and improving profitability as a result of shifting consumer behaviour during the pandemic.

Morele/Pigu, the Polish/Lithuanian e-commerce group, as a logical target. This news service reported in 2019, citing the group’s sponsor MCI Capital, that the group could be put for sale in 2021.

The Baltic tech startup scene is also active with players like Interactio, LightSpace Techologies, YaClass, AskRobin, Synctuition.

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by Agne Mazeike in Vilnus, Katka Krosnar in Prague and Jurek Maczynski in Warsaw with analytics by Thorsten Louie Pedersen and Zaynab Dost