ROMANIA Trends and Developments Contributed by: Ileana Glodeanu and Delia Dumitrescu, Wolf Theiss
Renewable energy investments Romania is committed to increasing its reliance on renewable energy sources. This commitment is cre - ating opportunities for PE investment in renewable energy projects, such as wind farms, solar power plants, battery storage and biomass facilities. The market favours investments in utility-scale projects with long-term power purchase agreements. PE funds with expertise in project development, construction management and regulatory navigation will have a competitive edge. Inflation and interest rate hikes Romania, like many countries globally, is experiencing high inflation and rising interest rates, with inflation rates exceeding 10% in 2024, driven by global com - modity price shocks and supply chain disruptions. The National Bank of Romania responded by raising benchmark interest rates to over 8%, the highest level in a decade. This macroeconomic environment posed challenges for PE investors. Higher interest rates increase the cost of debt financing, making deals more expensive. Inflation eroded the purchasing power of consumers and could negatively impact company profitability. To mitigate these downsides, PE funds may adopt conservative leverage ratios, incorporate inflation protection clauses and focus on sectors with pricing power or inflation-hedged revenues. Geopolitical uncertainty The ongoing war in Ukraine and broader geopolitical tensions are creating uncertainty and volatility in the market, making investors more cautious and selective in their investments. Investors are hesitant to invest in sectors that are directly affected by the war or that rely heavily on exports to Russia, Ukraine or other areas The Romanian government is increasingly focused on ensuring fair competition and preventing anti-compet - itive practices. This is leading to increased regulatory scrutiny of M&A, including PE deals. Romania’s PE landscape will be shaped by a conflu - ence of technological innovation, regulatory compli - ance and governance imperatives, sectoral growth drivers and macroeconomic challenges. To capitalise affected by political tensions. Increased regulatory scrutiny
Romania continue their digital transformation, there is growing demand for investments in tech-driven com - panies, especially in areas like artificial intelligence, cybersecurity, software development, fintech, e-com - merce and health-tech. The recent pandemic accelerated the adoption of digital technologies across all sectors, further fuel - ling demand for tech solutions. The European Com - mission forecasts a 20% increase in digital adoption among SMEs in Romania by 2026, spurred by EU digital economy initiatives and national digitisation programmes. The Romanian government’s Digital Transformation Strategy for 2021–27 aims to digitise public administration and key industries, opening fur - ther avenues for private investment in technology. PE funds should prioritise companies with proprietary technology, strong recurring revenues and scalability. Partnerships with tech incubators and leveraging gov - ernment digitalisation grants could further enhance deal returns. Increased focus on compliance and governance ESG considerations have firmly taken root in the M&A market. The emphasis on compliance and ESG prin - ciples in Romania’s PE market is no longer optional but a fundamental component of investment strategy. The European Union’s Green Deal and the Sustain - able Finance Disclosure Regulation (SFDR) are driving tighter requirements for transparency, sustainability and social responsibility in investment activities. In 2025 and beyond, ESG factors will be crucial in deal structuring, due diligence and post-transaction inte - gration. The authors expect to see increased invest - ments in renewable energy, sustainable agriculture and companies promoting social inclusion. Healthcare sector growth Romania’s healthcare sector presents significant opportunities for PE investment. PE funds are invest - ing in hospitals, clinics, diagnostic centres and phar - maceutical companies to meet the growing demand for quality healthcare services. Digital health plat - forms, telemedicine and medical device innovations are increasingly attractive.
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