Overview of deal market in Baltics & Belarus 2018
Dear Readers,

We are pleased to introduce this M&A and Private Equity newsflash offering a brief overview of 2018 – a record year for the Baltic transaction market, both by number of transactions announced and total disclosed value. The impressive results call for a closer look at the highlights of the year and a review of major trends and developments.


Based on Mergermaket statistics, 75 M&A transactions were announced in 2018 (42% more than in 2017 with 53), making it the best year to date in terms of number of deals. 2018 was also a record year by total disclosed value of transactions – EUR 2.726 billion, beating the previous record of EUR 2.521 billion in 2008.

Number of announced M&A transactions
in the Baltics 2000-2018
  Total disclosed value of announced M&A
transactions in the Baltics 2000-2018 (EUR million)

Estonia – Baltic market leader. Estonia clearly led the Baltic market by both number (32) and disclosed value (EUR 2.282 billion) of deals in 2018. Though the smallest among the three Baltic States, Estonia already leads by the number of deals for the third year in a row. In terms of value, the Blackstone/Luminor transaction has somewhat inflated the Estonian 2018 results, but even if the value of this acquisition were distributed proportionately to Luminor’s assets among the three Baltic states Estonia would still retain its No 1 position with EUR 1.546 billion compared to Latvia’s EUR 705 million and Lithuania’s EUR 475 million.

Number of transactions by country 2015-2018

Growing interest from foreign investors. As can be seen from the Top 10 deals table, the majority of investors are foreign (from outside the Baltics) while among the Top 10 deals five involved pan-Baltic target companies. It is also worth pointing out that two of the Top 10 deals involved Chinese investors, which indicates that they may also be discovering the Baltic region. Increasing deal values suggest that the Baltic market is maturing and that Baltic companies have been growing in size and continue consolidating across the Baltic region.

Most active sectors. In 2018 the two sectors that attracted the most deals were Consumer and Services (10 deals each), while not far behind are the TMT and Industrial sectors with 9 deals each. Half of all the deals in 2018 were made in these four sectors. Other sectors that demonstrated strong activity in 2018 were Energy and Utilities (7), and Agriculture (7). Notably, both of the largest deals in Latvia were in the Forestry sector, which has consolidated well in Latvia and Estonia, while consolidation is still on the way in Lithuania.

What will the future bring? Although in some way 2018 looks similar to 2008 – many deals with high values during the peak of the economic cycle – it doesn’t necessarily mean that 2019 will be (much) worse. With intensifying activity by private equity and venture capital funds in the Baltics and growing numbers of successful tech and other start-ups, we might see even more deals, especially of smaller size. At the same time we notice that buyers are becoming more cautious and we have already seen slowing M&A activity in Europe and across the world during recent quarters. Our outlook is cautiously optimistic – as long as the Baltics remain among the fastest growing regions in Europe, with stable political systems, an attractive investment climate and developing start-up ecosystems, we expect that foreign and local investors will continue investing in Baltic companies.


Private equity (PE) and venture capital (VC) market players also significantly contributed to the record M&A deal count. Financial investors participated in 3 out of the top 5 deals by disclosed value, including the largest deal of the year and one of the largest M&A and private equity deals in the history of the Baltic market – the EUR 1 billion acquisition of Luminor by Blackstone, one of the world’s largest PE players. This transaction is Blackstone's first investment in the Baltics.

Expanding and maturing market. In addition to deal making, the PE ‒ and especially the VC ‒ industry was highly productive in terms of raising new funds. In 2018 alone, 4 new VC funds were established or raised in Lithuania (Iron Wolf Capital, Practica Venture Capital II, LcX Opportunity Fund (LitCapital II), Business Angels Fund II), 5 in Latvia (INEC1 AIF and INEC 2 AIF (both under management of Expansion Capital AIFP)), Imprimatur Seed Fund 2, Imprimatur Venture Fund 2, FlyCap Mezzanine Fund II), 1 in Estonia (Tera Ventures Fund II) and 1 in Belarus (Bulba Ventures). While there are some new fund management teams, many of the new funds are second generation funds raised by old teams. Thus, the market is not only expanding, but also maturing.

New funds in 2019. It seems that 2019 may bring some interesting news as well – in 2018 it was announced that INVL Baltic Sea Growth Fund is starting activities and could be expected to achieve its first closing some time in 2019. With target size of EUR 200 million it could be the biggest local fund. Furthermore, at the end of 2019 BaltCap announced that it ‒ together with JBIC IG Partners, a Japanese government-backed PE and VC firm ‒ will establish a new EUR 100 million fund focusing on VC investments in the Nordic and Baltic region. This is a significant development in several aspects, as it will not only include large Japanese technology corporations like Honda, Omron and others as fund investors, but it will also be the first fund managed by Baltic fund managers focusing on the wider Nordic region.

What will the future bring? With an influx of new funds there should be no shortage of available financing, especially in the VC segment and small to medium size transactions which are all well covered by local market players. The acquisitions of Luminor, Bitė, MTG Baltic (now All Media Baltics) and others by private equity players in recent years show that bigger transactions may be pursued by major international financial investors. Thus, VC and PE funds may cover a full range of transactions both size-wise, from the smallest to the largest, and sector-wise, from start-ups to one of the biggest banking groups, to infrastructure deals etc. It also shows that funds are well positioned to take a further leap and become an even more important driver of the M&A market in the Baltics. Exciting times ahead!


The below table lists Top 10 deals in the Baltics by disclosed value. This record year for the Baltic market was also very busy for our team. We are grateful to our clients who involved Sorainen in many landmark M&A transactions, including all of the six largest deals in the Baltics this year.


The Belarusian M&A landscape in 2018 appeared to be moderately positive and in line with the overall modest growth of the local economy. The IT sector, which has been forging the most prominent deals for several recent years, remained one of the main newsmakers, though without star-catching projects like acquisitions by Facebook and Google in previous years. This quite expected activity was complemented by M&A bustle in retail as well as manufacturing. Even though the lower general maturity of the Belarusian market and smaller level of disclosure do not allow full assessment of the real numbers and values of transactions, we are observing further evolution of the M&A market in Belarus and growing potential for future projects.

What will the future bring? 2019 might be a less active period in M&A due to an expected slowdown in economic growth. The modest privatisation plan announced by the government is not adding reasons for optimism. We may see new start-up exits and market entries in IT involving major global players. We would also place a bet on some relatively new sectors that up to this moment have not demonstrated their full potential, like hardware, pharma, and high-tech manufacturing. With local private business groups having matured and become acquisitive, we will likely see some interesting domestic M&A deals as well.


This summary has been prepared on the basis of publicly available data and Mergermarket data.

in Lithuania           in Latvia
Laimonas Skibarka   Sergej Butov   Mantas Petkevičius   Eva Berlaus
Laimonas Skibarka
Managing Partner
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Sergej Butov
Partner, Co-head of Corporate and M&A
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Mantas Petkevičius
Partner, Head of Private Equity
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Eva Berlaus
Country Managing Partner
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in Estonia       in Belarus    
Toomas Prangli   Piret Jesse   Maksim Salahub    
Toomas Prangli
Country Managing Partner, Co-head of Corporate and M&A
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Piret Jesse
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Maksim Salahub
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