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Financing, Equity Investments, and ESG Go Big in Bosnia and Herzegovina: A Buzz Interview with Andrea Zubovic-Devedzic of CMS

Buzz Interview with Andrea Zubovic-Devedzic of CMS

Bosnia and Herzegovina
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A lull in the markets and legislative activity, due to political and global concerns, is offset by high foreign finance confidence and high foreign investor interest in Bosnia and Herzegovina, with client-driven ESG projects a particularly bright spot, according to Attorney-at-Law Andrea Zubovic-Devedzic, a Partner of CMS Reich-Rohrwig Hainz.

"The current political setup remains intricate in light of the upcoming general elections," Zubovic-Devedzic begins. "In general, the situation has always been complex over the past years but, considering the pandemic, war, and economic conditions, we are facing a distinct challenge. So, everyone is waiting to see what the next months will bring, in terms of political and economic changes."

Despite that general feeling, Zubovic-Devedzic highlights a recent winner in Bosnia and Herzegovina. "At the end of 2021, we achieved the equivalence of standards in banking between BiH and the EU," she explains. That was followed by the "very strong regulator reaction on the issue of Russian banks in the country, with temporary administration proceedings, and their swift offload, which did a lot to ensure that the overall banking system and the markets weren’t too badly affected." It all raised the confidence that "foreign financiers have in the Bosnian banking sector, despite the global situation: we’ve seen over ten deals involving financing in the financial sector in BiH happen so far this year," she says, "and we’re barely past the halfway mark."

"We’re also seeing a fundamental shift of the M&A market," Zubovic-Devedzic reports. "Unlike previous years, there are fewer regional M&A transactions involving local subsidiaries. The market’s being driven by direct investments," she points out. "Foreign partners, that have been cooperating with local businesses for some time now, decided to opt for equity investments – whether a controlling or a significant stake in local companies."

Most of these investments relate to industry and production, historically one of the country’s strong points, according to Zubovic-Devedzic. "This could well become a trend," she says, "with the investors further securing their supply chain and streamlining quality control, while also bringing in capital, know-how, and further improvements in corporate governance and structures." This is important, she notes, "as it creates a chain reaction, opening up markets for other local players, securing exports, and moving everyone closer to alignment with the requirements of EU legislation." The one downside to the markets becoming more integrated? "With the worldwide workforce shortage, we’re seeing a significant spill out of our workforce into other countries. If no remedies are implemented, we’re just years away from facing the same workforce issues of Western economies," she says.

"There is also an increasing interest in renewable energy," Zubovic-Devedzic adds. "Recently, certain restrictions were imposed on the development of small hydropower plants, mostly on environmental impact grounds. And the project for a massive thermal power plant is faltering, for both objective and contractual reasons. Accordingly, the focus has shifted to solar and wind energy, with increased financial institution activity on financing such projects."

"We still haven’t developed an ESG framework," Zubovic-Devedzic points out, "but it’s on the agenda of the banking sector, which is definitely having a spillover effect in other sectors." Looking back, she says "compliance used to be unpopular and often considered cumbersome." Compared to those GDPR early days, she notes that clients already know about ESG and willingly seek and engage in that conversation. "When initiatives come from the business side – it’s much easier and more efficient to answer those needs because the change is not perceived as imposed – the market changes swiftly as a result. There are fewer gaps between local and international markets now, and the butterfly effect is more direct, so local players understand they either get on board or face negative impacts."

CMS at a Glance

CMS Sofia is a full-service law firm, the largest international law firm in Bulgaria and one of the largest providers of legal services in the local market as a whole. The breadth and depth of our practice means that our lawyers are specialised, with a level of specialisation that few of our competitors can match.

CMS Sofia is the Bulgarian branch of CMS, a top ten global legal and tax services provider with over 5000 lawyers in 43 countries and 78 offices across the world.

CMS entered the Bulgarian market as one of the first internationally active law firms in 2005 and is now among the most respected legal advisors in the country. We have 7 partners, 4 counsel and over 30 lawyers in our office in Sofia.

Our legal experts, who are rooted in Bulgaria’s local culture, can also draw on years of experience in foreign countries and are at home in several legal systems at once. We know the particularities of the local market just as well as the needs of our clients and combine both to achieve optimum solutions. Our lawyers are Bulgarian qualified and we also have English qualified experts – all of them regularly working on cross-border mandates.

In our work, we focus on M&A, Energy, Projects and Construction, Banking and Finance, Real Estate, Media, IP and IT law, Tax, Employment law, Competition, Procurement and any kind of Dispute resolution, including arbitration and mediation. What’s more, we also take care of the entire legal management of our clients’ projects.

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