Although the total value of the largest published transactions has not been that huge in Latvia in 2021, the volume of the deal activity has still been impressive, keeping M&A advisors very busy, notes Eva Berlaus, head of our Corporate and M&A practice group in Latvia.
Large multi-nationals looking for manufacturing targets in Latvia
An interesting trend for 2021 has been that we see transactions where large multi-nationals are looking for manufacturing targets in Latvia with the aim of stabilising their supply chains. This is a clear consequence of the pandemic, which has brought an understanding that cheaper (in terms of salaries, and otherwise) options for production outside the EU are not always the best choice and that Latvia, which is part of the EU, but as regards production costs is still on the low side when compared to the EU average, and has an open and safe economy and skilled labour force, has good potential. We foresee that this trend will continue in 2022 as well.
Deal activity growing in the energy sector
We also observe that the energy sector, which has been in recent years an active field of investments, is also becoming visible with notable M&A deals (Energia Verde, purchases by Ignitis, Wasseman-Sigulda etc.), and here we believe that it is just the beginning and that, as the number of energy projects at more advanced stages of maturity is increasing (together with a total increase in energy projects in the market), deal activity will increase notably in this sector in the coming years.
Otherwise, the largest amount of deal activity has been more or less around the sectors that are usual for Latvia – some in telecom, some in pharma/manufacturing (Olainfarm, Spodrība, EKJU), some consumer-related (Lido, Coffee Nation); however, the IT/tech sector dominated with the majority of deals. It is, however, interesting to note that 2021 was the first year when the volume of IT/tech related deals was larger than in any other sector (with, of course, Printful, Latvia’s first unicorn, and Printify being the leaders) and, due to the very active and government-supported start-up community, we expect this trend to continue.
