Portuguese Deals Slowing, But Banking And Real Estate M&A Shows Promise

Author:Iberian Lawyer
Profession:Iberian Lawyer

Though deals activity in Portugal declined during the last 12 months, lawyers expect major banks to divest assets in 2017, while real estate and energy transactions should increase

Though there was an increase in small and medium-sized M&A deals in Portugal in 2016, deal flow and transactional values generally declined in the last year, lawyers say. Among the key drivers of deals activity in the country in 2016 were real estate transactions as well as the trend for banks to dispose of non-core businesses as they seek to improve the quality of their assets as well as their capital ratios.

The real estate sector led the M&A trend, with private equity firms active in the market as they took advantage of the abundance of assets on sale, according to Diogo Leónidas Rocha, partner at Garrigues in Lisbon. "We are confident in the continuing improvement of M&A activity, in line with what is happening in Spain," he says. "The pressure on large banks to sell participations in non-core businesses will certainly continue this coming year."

Overall, there was a slowdown in Portuguese deal activity in 2016 compared to the previous year. This was mainly due to political uncertainty and turmoil in the banking sector, specifically the resolution and sale of Banif, the €5 billion recapitalisation of Caixa Geral de Depositos (CGD) and the problematic attempts to sell Novo Banco. Major Portuguese M&A transactions in 2016 included Barclays' sale of its Portuguese Barclaycard business to WiZink Bank - Freshfields Bruckhaus Deringer advised Barclays, while Clifford Chance acted for WiZink. Meanwhile, Ardian acquired Ascendi PT II for €600 million - MLGTS advised Ascendi, while Cuatrecasas, Gonçalves Pereira and Linklaters acted for Ardian.

In addition to the real estate and finance sectors, there was also significant deal activity in the Portuguese energy, infrastructure and tourism industries. José Diogo Horta Osório, partner at Cuatrecasas, Gonçalves Pereira in Lisbon highlights infrastructure funds and private equity funds as being among the keenest investors. He adds that he expects there to be an increase in infrastructure, energy and real estate M&A in the coming year. "This is due to the availability of financing from banks, the relative political stability and the growth of the Portuguese economy, against all the...

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