Mergers and Acquisitions Activity: Fresh Tactics, Arising Obstacles, and Soaring Prospects
In a nutshell: M&A activity in Latvia and the Baltics booms in 2024, with 57 transactions making it the peak year yet—a climb of 78% from 2023. Here's a glimpse of what's trending in the region and what's next for Latvia.
The Baltics, a Bulwark of Business: Overview of 2024's M&A Activity
The Baltic States defies global economic turbulence, with a staggering 231 M&A deals worth a whopping €2.1 billion, a 76% surge year on year. Lithuania leads the pack with 41% of deals, followed by Estonia (34%) and Latvia (25%), despite the latter lagging in absolute volume. Investor interest in Latvia remains steady, hinting at a steadfast market direction. It's worth noting that Latvia retains growth potential, while Estonia faces a higher risk of economic recession.
Deal of the Year: Tallink Grupp's EUR 670 million acquisition by Infortar and Latvenergo's EUR 200 million wind farms purchase
The Baltics witnessed a remarkable seven deals exceeding the EUR 100 million mark this year, double the amount in 2023. Latvia's star deal was Latvenergo's EUR 200 million acquisition of wind farms in Lithuania, while Tallink Grupp clinched the region's largest deal at EUR 670 million.
International Investors Circle the Baltics
The most active investors came from beyond the Baltic region, with Germany, Finland, the UK, and Sweden leading the charge. Key deals included Germany’s H&J Brueggen’s acquisition of a 50% stake in Riga’s grain processing company Rigas Dzirnavnieks, and Finland's Lightspace Technologies' partnership with defence company Summa Defence.
Meanwhile, Latvian companies have been expanding their foothold abroad, with Balticovo, Digital Mind, and SIXT Baltics (Transporent SIA) making moves in Estonia, Poland, and Finland, respectively.
Leading Sectors in Latvia's M&A Landscape
Technology: Despite a slight decline in 2024, foreign investors remain starry-eyed over early-stage tech ventures, particularly fintech, SaaS, and e-commerce. Latvian tech startups continue to garner international acclaim, particularly in AI, FinTech, and cybersecurity.
Energy & Renewables: Substantial progress in developing renewable energy continues in Latvia, with the EU and private investments supporting the transformation of the sector, though growth has stabilized.
Financial Services & FinTech: Interest in local banks and startups consolidation is high, with Signet Bank's acquisition of LPB Bank and Pension fund manager Indexo's successful IPO prominent examples.
Transport & Logistics: The anticipated AirBaltic IPO in 2025 and continued port development and rail infrastructure projects underscore Latvia's expanding role as a crucial link between Europe and Asia.
What's next: 2025's M&A Forecast
With digitalization, distressed asset opportunities, and growing foreign investor interest on the horizon, M&A activity in 2025 is expected to be robust. Key sectors projected for growth include tech, fintech, renewable energy, and defence. A decline in interest rates will facilitate more ambitious acquisitions, and Latvia could position itself as a regional leader, leveraging favourable regulatory initiatives that promote innovation in financial services, AI, digital identity, and payment solutions.
Ellex Klavins: Your Partner in Legal Excellence
With over 30 years of experience, Ellex Klavins stands as a beacon of legal excellence in the Baltics, offering expert consultancy services in various business areas.
- In 2024, Latvia experienced a 78% increase in M&A activity compared to 2023, making it the busiest year yet with 57 transactions.
- Despite Latvia trailing behind Lithuania and Estonia in absolute volume, investor interest in the country remains consistent, hinting at a stable market direction.
- The most active investors in the Baltics came from countries outside the region, including Germany, Finland, the UK, and Sweden.
- In Latvia, technology remains a significant draw for foreign investors, with fintech, SaaS, and e-commerce startups receiving particular attention.
- The energy and renewables sector in Latvia continues to progress, with EU and private investments playing a key role in the transition of the sector.
- In the financial services and fintech sector, the acquisition of LPB Bank by Signet Bank and the successful IPO of Pension fund manager Indexo are high-profile examples of consolidation.
- As 2025 approaches, M&A activity is expected to remain robust, with a focus on tech, fintech, renewable energy, and defense sectors. A decline in interest rates is expected to facilitate more ambitious acquisitions, and Latvia could emerge as a regional leader in financial services, AI, digital identity, and payment solutions. Ellex Klavins, with over 30 years of experience, stands as a reliable partner in legal excellence in the Baltics.
