In the interview for Lawyer Monthly – September Edition, our partner Anisa Rrumbullaku gives a snapshot of the M&A picture and investment climate in Albania.

How has the M&A scope changed over the years in Albania?

There has been less M&A activity in the last three years as compared to the previous decade partly due to completion of most privatization of strategic sector industries. Plans to privatize remaining assets in the future, for example, Albpetrol, the state-owned oil production company can generate new M&A activity in the future.

Due to a non-functioning capital market (i.e. the first privately owned stock exchange was only licensed in June 2017), the deal-making activity is based on direct private transactions where private equity funds show less interest for this market as compared to other SEE jurisdictions. There has been increasing interest from Asian buyers in the last two years. For example, two highlight deals in 2016 included the Chinese Geo-Jade Petroleum purchase of Bankers Petroleum, a Canadian based company with oil state contracts and, the sale of the stake of the only airport company in Albania from Deutsche Investitions- und Entwicklungsgesellschaft (DEG), AviAlliance and the Albanian American Enterprise Funds (AAEF) to China Everbright Limited and Friedmann Pacific Asset Management.

The hydroelectricity sector’s M&A activity may have lost its peak but the energy sector in general continues to be the busiest one along the banking and finance sector and to some extent also the telecoms. The tourism sector can develop some M&A potential (with a decreased 6% VAT rate and the new government promises to enact tax incentives for 5 stars luxury structures). Completion of construction for TransAdriatic Pipeline, on the other hand in 2018, may open the door to new so-called ‘gasification’ projects.

M&A legal experts in the meantime have gained increased confidence to handle complex share purchase agreements or other transaction instruments similar to that of other SEE jurisdictions as the legal framework for M&As is up-to-date and not so different to that of other countries in this region (e.g. merger filing legislation for example is fully harmonized with EU law).

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