CEELM: First, congratulations on winning the Deal of the Year Award in Romania!
Taracila: Thank you! We are very happy to receive this award and the excitement is even bigger as it’s the second time we have won the Deal of the Year Award in Romania in just four years. At the first edition of the Awards another landmark transaction in Romania – AD Pharma’s sale to Dr. Max, the Czech pharmacy chain owned by Penta Investments – brought us the trophy. 2020 was a challenging year for all but, against all odds, our firm managed to secure an impressive number of M&A mandates and we see this award as a recognition of a strong year, with many headline M&A transactions signed by our team.
CEELM: Can you describe the deal for us and RTPR’s role in making it happen?
Taracila: RTPR assisted Macquarie Infrastructure and Real Assets (MIRA) in relation to the acquisition of a portfolio of power assets owned by the CEZ Group in Romania.
The portfolio consists of seven companies, including an 86,665-kilometer regulated electricity distribution network, an electricity and gas supply business with 1.4 million residential and industrial connections in the south-west of Romania, the largest renewable energy portfolio in Romania (622 megawatts of wind and hydropower production, including the Fantanele and Cogealac wind parks, the largest onshore wind farm in Europe), and a services company.
Our work included extensive due diligence on all businesses, detailed regulatory and market advice, structuring and transactional work, and financing work. The due diligence stage was essential for our client to understand the business and regulatory requirements and correctly evaluate the transaction.
We have also been involved in the secured financing transaction for the financing of the acquisition and the partial refinancing of the existing debt of the target group. On the financing transaction, which also represents one of the largest financings in Romania in 2020, our local team worked together with Allen & Overy teams from the Bratislava, Luxembourg, and London offices.
The deal also included multiple layers of negotiations with MIRA on both equity and debt fronts.
CEELM: How did you land the mandate and what do you believe it was about RTPR that got it for you?
Taracila: It was a competitive process in which we proposed a joint RTPR and Allen & Overy team and the client chose our offer. I believe it was a magic combination of Allen & Overy and RTPR’s impressive experience in M&A transactions combined with the expertise in the energy sector, where we have been involved in all major deals in Romania in recent years, that made us the first choice for our client.
CEELM: What was the most difficult part of this deal and how did you/your team circumvent it?
Taracila: One of the most difficult parts was fighting for the deal not only with international reputable investors but also with key state-related entities that benefited from an unfair advantage from the Government. A clear example was the suspension of sales and purchases of energy assets via legislative measures, under the pretext of the COVID-19 pandemic. Such changes could be seen as a state intervention to help some companies breach the time gap, but, in actuality, they were poorly drafted and ultimately did not help.
CEELM: In contrast, what, from your perspective, went particularly smoothly and what do you believe contributed to it?
Taracila: The process was well managed by the sell side, and this ensured predictability. Though I mentioned that one of the most difficult parts was the state’s intervention during the process, it is fair to also mention that, once a winner was declared, the state authorities were fair and the regulatory approvals went smoothly.
CEELM: In your view, what is the significance of this deal for the Romanian market? Why do you believe the judges voted for this deal over the others?
Taracila: This is the largest M&A deal in Romania in the last 12 years and is considered to be the fourth largest deal ever concluded in Romania. So it wasn’t a difficult choice for the judges!
Joking apart, this deal gave a very positive signal to the M&A market in Romania, especially in a year dominated by the COVID-19 crisis and its effects. As we all know, the global M&A market was hit hard by the pandemic in the first half of 2020, and Romania was no exception. If investors such as MIRA, who is one of the world’s leading alternative asset managers and the world’s largest infrastructure manager, look at Romania as an attractive market, it is definitely a good sign that our economy is on a good track and that there is potential for other transactions of such caliber.
CEELM: Can we look forward to future similar deals (size/industry/target/etc)? Why/why not?
Taracila: Romania has the potential to attract big names and there are many interesting opportunities for investors. Private equity and infrastructure funds are prospecting the market to find profitable businesses with growing perspectives. I am confident that we’ll see other interesting deals in the close future.