KPMG presents the analysis of Russian M&A for the first half of 2014.
Russian M&A fell by 36% in H1 2014 to USD27.8bn; the lowest level since the 2009 crisis.
The ongoing geopolitical situation and uncertainty surrounding Russia's economic outlook led the aggregate value of large deals (>USD500m) to fall by 50% to USD17.4bn. While the number of mid-size deals (>USD250m<USD500m) remained flat, the value of such deals declined by 11% to USD2.4bn. However, smaller deals (<USD250m) were seemingly unaffected by the crisis, with a record breaking 160 transactions announced, worth a combined USD8bn.
Energy and natural resources sectors continued to dominate Russian M&A, with 48 deals announced worth a combined USD14.1bn in H1 2014. The USD2.4bn JV between Alliance Oil and Independent Petroleum Co. was the largest deal in the period. While power generation company Volzhskaya TGK was the biggest spender consolidating four utility companies in deals worth a total of USD4bn.
The share of domestic M&A increased from 60% to 76% of Russian M&A in H1 2014, driven by the surge in small deals. An absence of large privatisations, such as VTB in H1 2013 (USD3.3bn), saw inbound M&A fall by 64% in H1 2014 to USD2.6bn - the USD1bn IPO of supermarket chain Lenta being the largest inbound deal. Whereas outbound M&A increased by 58% to USD3.8bn; albeit from a low base and driven by Polymetal's USD1bn purchase of Altynalmas Gold and Rosneft's USD1bn acquisition of a 13.1% stake in Pirelli.
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