In 2012, activity slowed down significantly in most of the sectors in Russia's M&A market, according to the recent issue of AK&M Information Agency's monthly bulletin MERGERS AND ACQUISITIONS MARKET.
As a matter of fact, only three sectors (mass media, insurance and the rapidly growing information technologies) witnessed a higher amount of transactions in 2012. However, without large transactions in absolute terms, mass media and insurance are no great contributors to the M&A market in Russia. The number of M&A events increased in the IT, mineral production and electric power sectors.
Despite the more frequent deals, the electric power witnessed a record slump in the amount of transactions as low margins prevent any major transactions here. The M&A market shrank considerably in the metallurgy sector where assets lose their appeal due to a depressed pricing environment. The chemical and petrochemical sector also misses major transactions now that consolidation is over in the mineral fertilizer segment.
"What raises most concern is the downturn in the sectors with the highest growth rates in 2011, including agriculture and communications," Yaroslava Zabello, Head of the Analytical Center, AK&M Information Agency, points out. "While rarer transactions in telecoms indicate that the long consolidation period is over, investors are clearly disappointed about payback prospects for agricultural assets.
In 2012, the transport sector witnessing 25 deals for a total of $7,328.7 million (14.7% of the total M&A market volume) replaced the chemical and petrochemical sector as the best performer. The largest M&A event here was the sale of the Vnukovo airport by Moscow City to the Government of Russia in March 2012, the total amount of transaction exceeding $1.5 billion.
The fuel and energy sector, the second best performer, lost by a hair, registering 32 transactions for a total of $7,245.1 million (14.6% of the total market volume). The largest transaction was the exchange of assets between Gazprom and BASF in November 2012, the indicative value being $1.5 billion.
The financial sector stands third with 42 deals for a total of $6,395.7 million (12.9%). The largest of them, also the highlight of the year, was the acquisition by Sberbank of Russia of Denizbank in Turkey for $3.8 billion.
The construction and development sector ranks fourth with 49 transactions for a total of $5,947.3 million (12%). The largest deal here was the acquisition by O1 Properties of the Belaya Ploshchad business center (Moscow) in December 2012 for $1 billion.
The telecom sector rounds out the Top 5 in 2012 registering 18 transactions for a total of $5,153.9 million (10.4% of the total market volume), the largest of them being consolidation of a controlling stake in MegaFon by Alisher Usmanov's companies for $2640 million
Just like in 2011, the services and trade sectors were unrivalled in the number of transactions (66 and 57 deals, respectively)