Chasing private money: Facing a better North

Signs of recovery are visible in certain sectors with the most significant transactions signed in retail, real estate, energy and the fertilizers production sector, says Robert Ghelasi, Managing Partner, Energie Finanzierung und Kapital

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ROBERT GHELASI

ROBERT GHELASI

MANAGING PARTNER at ENERGIE FINANZIERUNG UND KAPITAL

Romania’s share of regional private equity investments has declined in recent years as a clear divide has emerged between countries to the North such as Poland and the Czech Republic and those to the South such as Romania and Bulgaria – reflecting investor concerns around macroeconomic stability and the perception of relative lower investment risk in Poland and the Czech Republic.
 

The M&A market remained sensitive both to the Euro zone crisis and the domestic political environment, leading to a contraction in global liquidity, while investors’ appetite for emerging markets has decreased significantly. But the appetite for acquisitions is still present, despite sluggish economic growth in the Euro zone. The difficult situation facing the Euro zone may actually represent an opportunity as long as investors perceive Romania as a country with good economic potential, which offers an attractive yield on investments.

 

Signs of recovery are visible in certain sectors – the most significant transactions were in retail, real estate, energy and the fertilizers production sector.

 

FISCAL WISH LIST

  • Decreasing bureaucracy: By implementing a valuation system of public officials and by developing an ERP to integrate all public functions (fiscal included) to allow an easy and quick response of authorities to tax-payers needs,
  • Unifying all employee-related contributions into income tax and all employer-connected contribution into an overall employer's tax,
  • Increasing public revenues by reducing corruption as well as the involvement of political interests in the actions of tax-enforcement authorities while easing the overall level of taxation effort of tax-payers.

 

STATE VERSUS PRIVATE INVESTORS

There is an urgent need for setting a clear blueprint of long-term strategic development of the Romanian economy with steps to follow - i.e., the areas in which our economy would develop a competitive advantage within the world economy.

 

Also, a major lesson to be learned is that going to extremes is wrong regardless of direction;

 

More specifically, total privatization is detrimental to the welfare of citizens when we are talking about energy sector. Why? Because in comparison with other sectors, the energy is more than a simple traded good on a competitive market but it is a complex product with a big economic, social, strategic and political value. The strategic role of energy was clearly revealed in the last 40 years by various oil crises, regional conflicts, which degenerated into serious power failures, social protests (see the recent evolutions from Bulgaria).

 

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