The value of mergers and acquisitions in Portugal grows more than in European neighbors and the value of transactions and foreign investment increases, says the report entitled “Volume falls but value rises on Portuguese M&A in 2020”, published by the financial information agency Mergermarket in partnership with the law firm Cuatrecasas and Marsh, a world leader in insurance brokerage and risk management.
In 2020, the biggest Portuguese M&A business so far was the acquisition of an 81,2% stake in Brisa-Auto Estradas de Portugal by a consortium composed of the National Pension Service, the APG Group and the Swiss Life Asset Management. The dealer's sale operation, which was owned by Jose de Mello SGPS and Arcus Infrastructure Partners, was valued at 4,1 billion euros.
The analysis also reveals that foreign investment in Portugal during 2020 showed contradictory signs. Although several high-profile operations have taken place, the total number has dropped. Foreign investors announced 30 transactions from the beginning of the year to the end of November, which is below the 53 announced in 2019. Despite this, the sum of the traded values reached 6.900 billion - the highest value since 2014 and which covers about 90% of the total M&A value in the country this year.
According to the study, Portugal shows better performances in value of M&A operations than many of the other European countries, with a handful of large-scale operations to be announced in 2020. Therefore, this year's value represents the highest in the country since 2014 and represents an increase of 8,3% in relation to the total of 7.000 billion traded throughout the year 2019.
The year was not an easy one due to the Covid-19 pandemic, and, in line with the global trend in mergers and acquisitions (M&A) businesses, Portugal faced difficulties this year, with companies suspending large-scale spending and travel restrictions complicate the logistics of negotiations, admits Mergermarket in a statement.
With regard to private equity activity, in Portugal it dropped significantly in 2020, after a record year in 2019. So far, only eight buyouts in the combined amount of 1.200 million. Much of this value comes from the transaction that allowed Partners Group to take control of the agrochemical company Rovensa for 1.000 million, the study points out.
Nevertheless, a slight decrease during the summer, the movements of buyout across Europe they had a notable performance and the expectation is that 150.000 million euros will be reached for the third consecutive year, the report concludes.
“With a lot of firepower still available to investors, it is expected that the activity of buyout continue to grow in 2021 ″, reveals the statement.
Jonathan Klonowski, Research Editor EMEA, Mergermarket says in the note “This year Portugal went through a period of suspension of M&A activity, due to the outbreak of the coronavirus pandemic and the subsequent restrictions that put some investments to rest. With the increase in infection cases across Europe, it is likely that the new restrictions will again limit M&E activity in the last weeks of 2020 and the start of next year. However, the market may be cautiously optimistic that M&A will resume pre-Covid levels following vaccine development. ”
In turn, Mariana Norton dos Reis, partner of M&A and Private Equity, Cuatrecasas, referred that “we started 2020 with a very strong pipeline and the PEs at national and international level were with good expectations regarding the buyout opportunities in Portugal”, but “The Covid pandemic reduced M&A activity because some operations were delayed or canceled because sellers thought they would be harmed by the market situation, or because buyers had to decide on price and conditions in the context of uncertainty and more expensive financing, and still because some of the Targets are performing below their own average. PE societies had to prioritize their portfolios ”.
But even though the volume of M&A decreased significantly in Portugal, the total amount reached was quite high, mainly due to the so-called “macro deals” in the sectors of infrastructure, (sale of Brisa) and agrochemical (purchase of Rovensa). It is quite exceptional that there are transactions in the Portuguese market above 1.000 million, even more so in a year like this and more than one! ”, Admits the lawyer.
Finally, Rodrigo Simões de Almeida, CEO, Marsh Portugal, defended in the statement that “foreign investment will continue to be the most relevant catalyst in the transactional market in Portugal. When looking at the list of the largest transactions whose value has been made public, eight out of ten were carried out by international investors, which corresponds to around 95% of the volume of these transactions ”.
“It is also worth noting that the volume of dry powder held by investment funds private equity (estimated to be over US $ 1.500 billion) and the asset rotation plans developed by strategic investors (particularly in the energy sectors) could have a positive impact on the number and volume of operations in Portugal next year ”, he concludes .