The Road to Recovery: European M&A Outlook 2022
Around 71% of dealmakers agree that private equity (PE) firms are better placed than corporates to take advantage of buying opportunities presented by COVID-19, according to the ninth edition of the European M&A Outlook, as published by CMS in association with Mergermarket.
The report offers a comprehensive assessment of dealmaking sentiment in Europe’s M&A market. It reflects the opinions of 330 corporates and PE firms based in Europe, the Americas and APAC about their expectations for the European M&A market in the coming year.
While financial buyers may be better placed than strategic buyers, more than half of the survey’s respondents expect the overall level of European M&A activity to increase over the next 12 months, with both corporates and PE firms eager to make up for lost time. This stands in stark contrast to last year’s poll, in which 78% of interviewees were preparing for a fall in M&A.
Although asset prices have held up through the pandemic and huge amounts of government stimulus have kept businesses from insolvency, almost a quarter of respondents (24%) see undervalued targets as the most important buy-side driver of M&A activity over the next 12 months. A similar share (22%) identifies distressed-driven M&A as the most important catalyst for sell-side activity.
The pandemic has also highlighted how business profitability is inextricably linked to public health and social and environmental stability, prompting dealmakers to build ESG criteria into their M&A strategies.
Survey respondents see this as only the beginning, with 72% expecting ESG scrutiny to increase during the next three years, and 65% predicting that due diligence will focus more on ESG factors over the same period.
Sector-wise, technology, media and telecommunications (TMT) is among the sectors set to continue to dominate dealmaking.
PayPal acquires Paidy for USD 2.7 billion
PayPal, the international payment system, has announced an agreement on the acquisition of Paidy, the Japanese platform designed to make payments in installments.
PayPal will pay about USD 2.7 billion, mostly in cash.
The acquisition will develop the capabilities, distribution, and relevance of PayPal on the Japanese domestic payment market, which is the third-largest e-commerce market in the world. It will also complement Paypal’s current commercial activities in Japan that are dedicated to cross-border e-commerce.
Paidy deals with “buy now, pay later” (BNPL) solutions. Paidy’s services are used by more than 6 million registered users.
Paidy investors include the sons of American billionaire George Soros, Jonathan and Robert.
The transaction between PayPal and Paidy is expected to be closed in Q4 this year.
After that, Paidy will continue to manage its existing business and retain its brand.
Swiss company “subsidiary” invests USD 40 million in Chornomorsk Port
The Ukrainian Sea Ports Authority (USPA) and a subsidiary of RISOIL S.A., Switzerland, have signed a coordination contract intended to raise USD 40 million worth of direct investment.
This means the implementation of interdependent projects in Chornomorsk Sea Port.
In particular, under the contract terms, JV RISOIL TERMINAL LLC plans to build a dual pier 339.75 m in length at the junction of berths Nos. 10, 11.
For its part, USPA will carry out dredging works at the landing downstream of the third stage of the 1st basin of Sukhyi Liman, reaching 15 m in depth.
Thus, another dual berth will appear in Ukraine, designed to take in and handle large-capacity vessels, which are vital for our agricultural exports.
Chornomorsk Port needed dredging 15 years ago, and for all this time this task was defined as the priority and strategic objective of the ministry and port authorities.
Private investors were willing to invest, but they needed guarantees and determination on the part of the state.
This is the first agreement signed with stakeholders under the “take or pay” standard. It is expected that if the USPA project costs fail to pay off within a certain period of time, the Authority will be paid the relevant compensation from the port operator.
More than UAH 17 billion worth of capital investment is needed over the next 5 years to upgrade the infrastructure of Ukrainian ports.
Monobank acquired service to combine restaurant payments and reviews
The fintech project Monobank has acquired Expirenza, a service for visitors to process reviews. There are plans to combine reviews, menus, and payment in one QR-code for restaurants.
The Expirenza platform was founded in 2019 by Oleksandr Hudkov and Mykhailo Seletsky, two residents of Kyiv. More than 2,000 companies are currently its clients, including Kyiv Food Market, Mimosa Brooklyn Plaza, Vodafone, Welfare, Thai and Chinese Hi, SPORTLIFE.
From now on, the service will combine payments through Monobank in public food and drink venues with Expirenza’s services. That is, a single QR-code will be created for customers so that they can both view the menu and pay or tip.
A service called Expirenza by Mono will be launched in September-October and will support any bank cards.
World Bank to stop publishing Doing Business rating
The World Bank has announced that it will no longer publish a Doing Business report on the state and conditions of doing business in different countries.
Trust in the World Bank Group’s research is vital. World Bank research covers the actions of policy-makers, helps countries make informed decisions, and allows stakeholders to assess economic and social improvements more accurately.
“Such research has also been a valuable tool for the private sector, civil society, academic community, journalists, and others, broadening understanding of global issues,” the financial institution said in a post on its official website.
The World Bank recalled a number of violations related to changes in the Doing Business 2018 and Doing Business 2020 reports.
The financial institution duly began a series of reviews and audits of reports and their methodologies.
Following the review of all currently available information on doing business, including the findings of past reviews, reports, and audits, the management of the World Bank Group decided to close the Doing Business rating.
Ukrainian startup GitLab set to go public, market valuation exceeds USD 6 billion
GitLab, the startup for developers, whose last market valuation exceeded USD 6 billion, plans a public share placement on the NASDAQ stock exchange. It was founded by Dmytro Zaporozhets and Valery Sizov, both of whom are Kharkiv residents.
Last year, the company’s revenue reached USD 200 million. In the last quarter of 2020, revenue grew by 69% year on year. At the same time, the net loss is about USD 40 million.
GitLab became a “unicorn”. That is, it was valued at USD 1 billion in 2018.
The startup’s main competitors are GitHub, acquired by Microsoft for USD 7.5 billion in 2018, and Atlassian.
The last valuation of the company was USD 6 billion as of January 2021, in a late financing round.
The company’s largest shareholders are Sid Seabrandi, owning 18.9%, and Khosla Ventures, owning 14%. Dmytro Zaporozhets, one of the co-founders, owns up to 5%.
Google invests EUR 1 billion in cloud services and renewable energy in Germany
US technology giant Google recently claimed that by 2030 it would invest EUR 1 billion to expand the cloud computing infrastructure in Germany and increase the use of renewable energy.
The Internet giant plans to add new cloud computing centers in the federal land of Berlin and in the city of Hanau.
Within the next years, Google will buy more than 140 MW of electricity from a German subsidiary of Engie, the French utility company, to manage data processing centers.
Engie will ensure that 80% of that electricity comes from carbon sources, including a new solar fleet and 22 wind farms operating in Germany. Google intends to switch to renewable energy by 2030 on a full-scale basis.