Investments from the wide world

The acquisition of the majority holding of Luminor by the world’s largest private capital firm Blackstone is the culmination of a series of major transactions that have seen Scandinavian investments replaced by money from the world beyond – Germany, London, China and USA.

“The spectrum of where investors come from has widened considerably,” said Toomas Prangli, leading partner at the Estonian office of law firm Sorainen. “One reason could be that those Scandinavian investors who have wanted to invest here have already done so. There are others of course, but the relative importance of Scandinavian investments has fallen compared to past years.”

Leading partner at law firm Ellex Raidla, Sven Papp, explained that Estonia and the other Baltic countries made it back onto the radar of major international investment funds two years ago with the sale of Starman.

Starman’s suitors included major U.S. private capital fund Providence and the legendary KKR widely seen as the creator of the private capital investment concept. Both lost Starman to Finnish telecommunications company Elisa. Providence acquired Sweden’s Modern Times Group’s Baltic businesses, including the Estonian TV network TV3 last year.

“If they are having a look, it peaks the interest of other major players that want to know what their competitors are looking at,” Sven Papp said. “It all started with the sale of Starman, yes.”

He said that the acquisition of Luminor is noteworthy because it is a lot of money for this region. Secondly, it is the banking sector the reputation of which has taken a big hit here. Thirdly, there is the Crimea factor.

“It seems investors have realized Putin’s Russia is not a problem in Estonia, even though it has been on people’s mind considering Russia’s close proximity – in terms of security of investments,” Papp explained. “As far as I’ve been involved in these kinds of discussions, the conclusion has been that there is no problem in the Baltics and that a parallel cannot be drawn between Crimea and the Baltics.”

While analysts were united in lamenting the exodus of foreign investors from the Baltics a little while ago, talking about the possible reasons investors have returned to Estonia and the other Baltic countries, the opinions of Prangli and Papp differ. Asked whether big money just happened to glance toward the Baltics, whether the region has become more attractive or whether central banks’ monetary policy has made investing so cheap that people are willing to pour money into anything, Sven Papp said that the availability of money and cheap loans is the reason.

“Who can tell for certain, but that is what I believe. There is a lot of money and cheap credit in the world, while jewels it can buy aren’t nearly as numerous,” Papp explained. He said that general business environment has improved considerably since the financial crisis of 2008-2009, investors’ confidence has returned and there is no longer talk of the weakness of the euro. At the same time, government bonds aren’t returning anything, and the stock market is a rollercoaster. That is why direct investments are the only place where one can make money. “Money looking for a home clearly outweighs profitable and sensible investment opportunities,” he added.

Toomas Prangli said that he never saw foreign capital leaving. “Foreign capital has been active in Estonia all along. Activity has been greater among Estonian investors,” Prangli said. The expert said that Estonian companies have started buying up competitors or ventures in other sectors and Estonian executives have become bolder, which is why he feels Estonians are also buying things back from foreign capital.

“Foreign investors’ interest in the Baltics never fell, rather Estonians became more interested in acquiring ventures. And that interest keeps growing,” Prangli said.

The consultant said that Baltic companies are growing and are starting to appear on the radars of investors from beyond Scandinavia.

“That alone is bringing in more investments,” he said. “In addition to American investors, we’ve also seen money from China. The Chinese have invested in Taxify and acquired Magnetic MRO the headquarters of which is in Estonia.”

The specialists are optimistic concerning the future and believe that news of other major transactions are in store, provided no great disaster takes place.

“Looking at what we have on the table, this party will probably last until the end of the year, and we’ll see what next year will bring,” Sven Papp said.

Asked whether more news could be expected this year, Papp said: “I believe there will be a few more things. However, things are so good right now, I doubt they can get better.”

Toomas Prangli also said that there are no signs of a cooldown, and that the volume of transactions should remain unchanged this year and in the first half of next year.

“Should we see the market flooded or a crash of some sort, some major deals will likely be put on ice; however, that might open the door for smaller transactions – if shareholders come back down to earth in terms of price expectations and are willing to sell,” Prangli explained.

Asked whether there is another billion deal on the horizon, Prangli laughed and said: “Let’s hope so. While it is difficult to forecast, we have companies that are worth a billion euros. Taxify was recently valued as a billion-euro company for instance.”

Read more news of Tallinn on our site.

news.postimees.ee
acquisition Blackstone ,Germany London China
If you notice an error, highlight the text you want and press Ctrl + Enter to report it to the editor
6 views in january
I recommend
No recommendations yet

Comments

Post your comment to communicate and discuss this article.

Politics
Even though education is a matter close to the heart of Estonia 200 leader Kristina Kallas, she cannot imagine herself fighting for the post of education minister: ideas can also be realized by someone else. You just took away Postimees’ editor-in-chief. In your opinion, how is the editorial to feel? Lauri [Hussar] had to give the matter thought, and I presume he did. We talked about why he wants to go into politics. Still, to what extent do you imagine wh...
Society
TALLINN – Russia is seeking integration in Estonia only in words, Kalev Stoicescu, researcher at the International Center for Defense and Security (ICDS) who is running on the ticket of the Estonia 200 party in the March 3 general elections, said on Wednesday commenting on the words said on the subject by Russian Foreign Minister Sergey Lavrov.  "Russia is the only neighboring state which does not wish -- due to its own interests -- progress in integration...
Politics
Former top centrist Evelyn Sepp admitted that she donated money the origin of which was unknown to her to the Center Party in 2006. The former politician claimed other members also engaged in the practice but refused to name names. Sepp’s confession on ETV investigative journalism program «Pealtnägija» does not come as a total bombshell. She first said that such covert funding of parties is a widespread practice in the aftermath of the Silvergate scandal i...
Society
"In addition to our ongoing programme of passenger vessel renovations, we are also continuing to upgrade and modernise our cargo vessels to ensure that we continue to develop this important part of our business," he noted, adding that the relocation of the company's Estonia-Finland cargo route to Muuga on the Estonian side in October 2017 and the launch of the Smart Port solution in Tallinn's Old City Harbour in spring 2018 both contributed to improved ser...
Society
During the final week of 2018, a total of 2,524 patients with viral upper respiratory infections sought medical attention, 47.5% of whom were children. A total of 210 cases of influenza were laboratory confirmed, nearly twice as many as during the week before, according to Health Board data. Over the past two weeks, the number of flu cases has quadrupled. The majority of these cases were laboratory confirmed at emergency medical departments, from which pat...
Society
I actually think that B1 is too low of a bar for attaining citizenship. You still can't participate in Estonian society on anything other than a superficial level as noted above, so I'm not sure how you can constitute a "citizen" on that basis. Naturally there has to be a high degree of arbitrariness, and that's precisely the point — whilst B1 level might be sufficient in German or French (I understand that it is the benchmark level when applying for citiz...
Society
Following a white Christmas throughout most of Estonia, Wednesday will see sleet and even rain in parts of the country, and temperatures hovering around the freezing point will means slippery road conditions. Early Wednesday morning, many major highways were salted or wet, but some patches were still icy, the Estonian Road Administration said. Eastern parts of the country will see scattered rain or sleet. Temperatures throughout the day will remain around...
Society
Last weekend, Christmas Eve as well as Christmas Day and Boxing Day still ahead means that most chemist's shops are closed for five days in a row. Tallinners can still get hold of prescription as well as over-the-counter drugs in the 5 Tõnismägi St and 19 Vikerlase St shops. As doctors' practices are closed for the holidays as well, people will have to turn to the emergency room of a nearby hospital in case of any more serious health problems. In Tallinn,...
Society
Irene Ilves, the mother of former President Toomas Hendrik Ilves, died on Tuesday aged 91. Irene Ilves was born on 6 January 1927. An Estonian refugee, she raised her family in New Jersey, on the US East Coast. She is survived by two sons, Andres Eerik and Toomas Hendrik, and four grandchildren, Juulia Kristiine, Luukas Kristjan, Kadri Keiu and Hans Hendrik, Mr Ilves wrote on social media on Wednesday, adding that she will be very missed by family and frie...