H1 2015 Russian M&A fell to its lowest level for ... | KPMG | RU

H1 2015 Russian M&A fell to its lowest level for six years as activity almost halved

H1 2015 Russian M&A fell to its lowest level for ...

Russian M&A totalled just USD22.2 billion in H1 2015,58% lower than the prior year. Activity was down by 45% to 217 deals, although this was still well above the level seen in 2010–2013.

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Deals valued above USD500 million accounted for 61% of total Russian M&A (H1 2014: 68%) but just 5% of deal volume with values disclosed (H1 2014: 8%) Transactions of less than USD100 million accounted for 81% of deals with values disclosed in H1 2015, up from 74% in the prior year. As the market contracted amongst a small number of large deals, the average transaction value fell by 30% to USD131 million and the ten largest deals accounted for 65% of total Russian M&A in H1 2015, compared to 52% in the previous year.

The transport & infrastructure, and oil & gas, sectors accounted for 61% of Russian M&A in H1 2015 however, investment was highly concentrated in a small number of large deals:

  • The acquisition of Stroygazconsulting accounted for 91% of transport & infrastructure M&A
  • The five largest deals in the sector accounted for 85% of oil & gas M&A

Real estate & construction remained the most active sector with 52 deals, less than half the H1 2014 volume Innovation & technology saw a 36% increase in activity, with a total of 34 transactions.

Although domestic M&A continued to account for two thirds of deal value, the total invested declined by 58% to USD15.0 billion as concerns over the economic outlook mounted and activity fell by over half to 144 deals.

Private Equity (PE) M&A increased by 62% in H1 2015 to USD10.4 billion due largely to the Stroygazconsulting acquisition – with a small increase in deal activity. The underlying value of PE M&A, excluding the Stroygazconsulting deal, fell by 47% to USD3.4 billion Acquisitions accounted for 89% of PE deals, up from 71% in H1 2014. Over half (24) of acquisitions were in the innovation & technology sector, of which two thirds (16) were outbound deals.

The market cap of Russia’s largest companies fell by 31% in the last year, while analysts expect predicted forward P/E and net debt/EBITDA ratios to decline by 8% in the coming year. Monthly deal volumes have fallen sharply, and appear to be heading toward the 2010 to 2013 trend in H2 2015.

Our analysis indicates that Russian M&A may fall to USD32–43 billion in 2015; below our previous estimate of USD40–50 billion.

 

Russian M&A Review H1 2015

Russian M&A Review H1 2015

Russian M&A fell 58% to USD22.2 billion in H1 2015; the lowest level for six years

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