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Guest Editorial: Serbia in the Regional Spotlight


It’s been a long hot summer for much of the Balkans and Central Europe, and with more heat promised I wonder if we will see some of it in the legal markets too. Most top tier law firms talk of this being a very unusual summer in that they have a full work load.

Patricia-GannonAs a short background, I am an Irish lawyer living in Belgrade and working in all the markets of the former Yugoslavia for 20 years now. The resilience of the region never ceases to amaze me. Although we face daily reminders of the recent past and frustrations when opportunities are missed or investments lost, it is clear that this is still an emerging part of Europe full of potential which many investors are looking at more closely.

The work that I do allows me a birds’ eye view of a number of these markets, and there certainly are trends to observe. In Slovenia, for example, we have seen a relaunched privatization program and some successful sales over the past 2 years. The recent failure to sell Telekom Slovenia is hopefully not the beginning of a trend. The restructuring of major local companies and sale of NPL portfolios makes Slovenia one of the hottest markets in the region at the moment. Croatia, on the other hand, has been a sluggish market since its EU accession, and despite some offshore oil and gas tenders and PPP projects there is market concern that it’s underperforming. Bosnia and Herzegovina continues to be challenged by its political situation and limited investment opportunities for larger deals. Montenegro provides our firm with a constant flow of work, particularly in infrastructure and energy/renewable projects, although, being a small market, it is often overlooked by other service providers. Macedonia has more infrastructure projects on the radar and still attracts some interesting investors in automotive and other industries.

Serbia remains our powerhouse market, however, as our team of 80 lawyers here provides full service to a wide diversity of clients. We have recently been involved in the largest transactions in the Balkans and observe a trend of more and more cross-border acquisitions. Clients such as Mid Europa and KKR lead the way as they consolidate in certain sectors such as cable and FMCG companies. The small size of the former Yugoslav markets and their complexity has put off many investors, and we hope that with extremely positive exits we will see more PE houses come to the market. We have noticed that PE clients are looking to acquire a substantial asset here and then look at add-on opportunities in nearby markets. This is not a trend that we have seen too much between countries such as Romania and Bulgaria or the Czech Republic and Slovakia for example, and I think this points back to the fact that the former Yugoslavia was one market, and there is still a deep understanding of the region’s brands and products. 

In September, we will again participate in the SEE M&A and Private Equity Conference which drew over 200 participants last year – a number that a only a few years ago would be considered high. 

I have always been a strong advocate for the role of Private Equity in emerging markets. I am really happy to see more and more investors come and at least explore the region better. It’s still early days for the levels of growth that they expect, but we hope that as long as the region is stable politically that there will be room to grow economically. A recent trend has been the number of small funds coming from Central European countries such as the Czech Republic, Poland, and Lithuania, in addition to the global players. 

Notably, Serbia will see the sale of Telekom Serbia this autumn. The companies that have submitted non-binding bids included 5 PE houses, which reflects a big shift since the last time the Government tried to privatize it. This is a new dynamic to the process and, in my view, a welcome one, as the asset will require large-scale investment and internal restructuring. 

I believe there are many more diverse and exciting deals of substance coming along in the next few years which truly merit investigation by players who have been in CEE for years already and hope to expand their business. Global players from the Middle East, China, Russia, Turkey, and Azerbaijan all lend a more international flavor to the local business community.

In summary, over 20 active years in the former Yugoslavia I can say that there’s never a dull moment. Opportunity is everywhere, and helping clients to achieve their business plan is what we do and still enjoy.

By Patricia Gannon, Senior Partner, Karanovic & Nikolic

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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