SERBIA Trends and Developments Contributed by: Miodrag Jevtić, Gecić Law
financing costs and improve deal terms. Over time, REITs may become an essential tool in structuring and financing acquisitions. ESG as a Strategic Imperative Serbia has made notable progress in embed- ding ESG into its legal and financial systems. The government has committed to the United Nations Sustainable Development Goals and ratified the Paris Agreement, aligning its envi- ronmental, social and governance policies with international standards. These commitments are reflected in strategic plans and reforms, particu- larly in energy diversification and decarbonisa- tion. A key development is Serbia’s Sustainable Finance Framework, which enables the issuance of Green, Social and Sustainable Finance Instru- ments. While not directly focused on acquisi- tion finance, this framework is highly relevant to the evolving structure of public sector and infrastructure financing, which intersects with acquisition finance regarding transaction struc- turing, risk allocation and ESG due diligence. From an acquisition finance perspective, the Framework’s emphasis on using proceeds, eval- uation and selection, and reporting and verifica- tion aligns with standard ESG-linked lending and acquisition structures. For example, buyers in acquisition transactions involving infrastructure or utilities increasingly rely on green/sustainable financing to fund the purchase of ESG-compliant assets. The Ser- bian Framework sets precise criteria for eligible expenditures, such as renewable energy, energy efficiency, clean transport, healthcare, educa- tion, and pollution control, all sectors with grow- ing M&A activity driven by sustainable invest- ment mandates.
Furthermore, the document creates mecha- nisms for assigning proceeds to specific pro- jects. It introduces “virtual register” for tracking the use of funds – tools that mirror escrow and monitoring structures often used in acquisition finance to ensure covenant compliance and use- of-proceeds integrity. This approach enhances transparency and investor confidence, which are critical in green M&A deals, especially when sovereign or quasi-sovereign guarantees are involved. The Framework also supports the development of social and economic infrastructure, particular- ly in underserved regions. This opens doors for public-private partnerships (PPPs) or acquisition transactions involving concessionaires or utility providers where green credentials influence cap- ital structure and funding terms. For acquirers or sponsors seeking to invest in Serbia’s health- care, education, transport or energy sectors, this Framework signals the potential availability of concessional or sustainability-linked sovereign co-financing, thereby reducing the overall cost of capital. In conclusion, the Sustainable Finance Frame- work offers a clear regulatory and fiscal road- map for blending sovereign ESG financing with private sector capital, especially in infrastructure and development-heavy acquisitions. It marks a structural benchmark for future, green-linked transaction planning in Serbia and the broader Western Balkans. Outlook for 2025 and Beyond Looking ahead to 2025, Serbia’s acquisition finance landscape is set to continue its upward trajectory. The ongoing M&A activity and an improving macroeconomic environment position Serbia as an increasingly important destination for foreign investments. The country’s financial
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