Jornal Económico celebrates its fourth anniversary on September 16. In the four years, all of them growing, the newspaper has always aimed to report the main events in the economy, in politics, and in the world. The most important look has always been, however, forward - what will happen next? At a time of uncertainty due to the pandemic, we decided to mark the anniversary with works on the future. We offer our readers analyzes on the perspectives of the economy, markets and politics (national and foreign). We have a great interview with the president of AICEP and also a Forum in which 33 leaders suggest the recipes to help Portugal out of an unexpected crisis. Thank you for your preference!

The mergers and acquisitions market (M&A, in the Anglo-Saxon acronym) in Portugal continues to grow in value, despite the number of transactions having fallen slightly in year-on-year terms. Until the end of August, the country registered 207 operations, 8% less than in the same period last year, with 11,3 billion euros being handled, representing an increase of 40%, according to the latest data from the international Transactional Track Record (TTR) directory.

Throughout the first eight months of the year, the real estate and technology sectors remained on the podium of the most active, with 56 and 28 deals, respectively. It is also in these areas that venture capital funds show the greatest appetite, having made 37 investments that moved 271 million euros - 57% more than in the first eight months of 2019. Private equity funds registered 12 operations, valued at 1,9 billion euros - 20% higher.

According to the experts contacted by Jornal Económico (JE), this type of operations will show an upward trajectory, even due to the context of low interest rates, and may be a good solution for companies to expand their businesses or reposition themselves.

“As demonstrated in the last financial crisis, whoever had the audacity and the ingenuity to complete strategic acquisitions was the winner at the time of recovery.

On one side of the spectrum are today corporates that have accumulated significant liquidity in recent years and a global private equity industry thirsting for opportunities to channel a record level of liquidity to invest, on the other are businesses that, although operationally viable, currently have shortcomings that they cannot overcome without external capital injections ”, says João Nuno Palma, vice president of the executive committee of Millennium bcp, which is responsible for BCP Investment Banking. In his opinion, it is up to the players in this market, such as investment banks, to play the role of catalysts in transforming the economy and to attract capital to the businesses that need it most, “thus being able to benefit from the strong injection of liquidity in progress”.

 

'Pipeline' to come to the market
Pedro Costa, responsible for Corporate Solutions at Haitong Bank, is optimistic about the recovery of the mergers and acquisitions activity in Portugal. The investment bank of which it is a part acts as a financial advisor in current operations such as the partnership between Mota-Engil and the Chinese construction group Acom or the privatization of assets of Efacec, which were temporarily transferred to the State in July. “Private equity investors and investment funds and infrastructure, mainly international, have been showing great interest and dynamics in this market, with the sale of Brisa and Rovensa being recent examples. With the financial sponsors' portfolios reaching maturity, there is a pipeline of M&A operations to come to market in the near future with some of these investors exiting these investments ”, he tells JE.

For example, Santander was involved in advising Cellnex on the acquisition of Omtel in Portugal (for 800 million euros), Sonae Sierra and APG in the sale of 50% of Sierra Prime's share capital (for 525 million euros), to Glennmont Partners in the sale of solar portfolio in Portugal (value not disclosed) and NOS in the sale of 100% of NOS Towering to Cellnex (375 million euros + 175 million euros).

Acácio Matoso Rego, responsible for the Corporate Finance / M & A area of ​​Santander in Portugal, predicts that the uncertainty regarding the duration of the crisis or the speed of the economic recovery will not negatively influence the M&A activity, which should remain “at relatively high levels” due to transactions such as those mentioned above or to other “more opportunistic ones in the sectors that are more cyclical and more affected by the crisis, as the valuations of the most cyclical assets and those most affected by the crisis are decreasing in the short or medium term, or that more sales of distress assets ”.

Francisco Rangel, director of Caixa BI recalls that in phases of this uncertainty and even economic contraction “there can potentially be an increase in opportunities for M&A operations”.

“The demand for efficiency gains, which often involves the need for internal restructuring of companies or economic groups, the optimization of the capital structure or the urgency to reinforce permanent capital and the execution of the expansion and growth plans of the companies, lead many to look at merger and acquisition operations as an instrument for achieving those objectives ”, he argues, in statements to JE.

Observing the performance of the transactional market last month alone, 24 M&A transactions (between announced and completed) were recorded, with a total value of 1,2 billion euros - in this case, a decrease of 15% in number and 12% in value compared to August 2019. For TTR, the business that stood out was the acquisition of a majority stake held by Engie and EDP in Windplus by OW OffShore, which moved 61 million euros.

Who were the financial advisors that stood out the most?
The ranking of financial advisors this year (data from January to August) is led, in value traded, by Caixa BI, Millennium bcp and Daiwa Capital Markets (2.433 million euros), Banco Santander (1.822 million euros, CaixaBank Corporate Finance, Lazard, Mediobanca, AZ Capital, Boston Consulting Group (BCG), Alantra, Carnegie and Crosbie.

In number, the list is headed by Santander, followed by CaixaBank Corporate Finance and Caixa BI. The table of financial institutions that stand out for the number of advised transactions is also composed of the others that were mentioned, except that Crosbie leaves and the Ifedes Group enters the 6th position.
In the first half of 2020 the firms that stood out, both in number and in value, were exactly the same, having only added the trio Alvarez & Marsal, CloudOrigin and Torreya Partners to the ranking by traded value.

Source: O Jornal Económico - Portugal