The Buzz in Romania: Interview with Horea Popescu of CMS

The Buzz in Romania: Interview with Horea Popescu of CMS

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“Romania's Liberal government has recently announced a new program of investment," says Horea Popescu, CMS Partner and Head of Corporate M&A in CEE. “The goal behind the program is an economic relaunch. The government has only published a white paper so far, which is currently being debated and commented on.” 

The proposed program will focus primarily on investment, Popescu says, “as opposed to other types of public spending. It sets a goal of about EUR 100 billion to be invested over the next decade.” The program complements the European Commission's recovery plan, which, together with the amounts allocated to Romania in the future EU budget, is expected to provide “about EUR 80 billion to Romania in grants and loans.“ 

“We’re also due to have local elections across the country by the end of September," Popescu continues. “This will be the first test for those running the government – to see if their leadership is favored by the citizens.“ He says that this will serve as an indicator of what the outcome of upcoming parliamentary elections might be. Of course, the specific date of those elections is unclear, he notes. “The parliamentary elections were initially planned for November, but have since been postponed and are likely to occur by the year’s end or early in 2021." 

Otherwise, the economy seems to be moving along reasonably well, considering the circumstances. Popescu reports that “the big regional banks have positive forecasts when it comes to Romania’s  economy – with current predictions indicating a GDP drop in the single digits.“ He says that ERSTE Bank and Raiffeisen Bank currently predict a 4.7-5% decrease, which he finds encouraging moving into 2021. 

And the big deals seem to be moving forward as well, albeit sometimes in fits and starts. Popescu points to AFI Europe’s approximately EUR 300 million acquisition of the Romanian office portfolio of NEPI Rockcastle. “The agreement was initially executed last December,” he says, “and it was due to close in March, but it nearly fell through when the crisis started — the parties even entered an arbitration proceeding.” However, he reports, the deal has since been saved. “It was re-executed this August and is expected to close in the next four months.“

Popescu also reports that, like Real Estate, Energy (including Renewables) remains strong. “We are seeing lots of activity in this sector as well,” he says, "with many smaller transactions taking place – this will likely be a very active area in the next six to twelve months.“

Popescu comments that the legal market in Romania is “business as usual," with firms getting back to normal, in terms of their operations, with no significant contractions or closures so far as a result of the crisis.