Dentons Partner and and Head of the Capital Markets group in Bucharest Loredana Chitu highlights Romania's vibrant M&A market, driven by strong investor interest in energy, technology, and logistics-focused real estate, while also cautioning that ongoing geopolitical and economic challenges, as well as upcoming elections, could influence investment activity throughout 2025.
"2024 was quite a vibrant year for M&A in Romania – we saw strong activity across several key sectors, particularly in energy, technology – with a focus on data centers and AI, real estate, with a notable focus on logistics investments, and consumer." Chitu begins. "Investors were actively interested in buying or divesting, and overall, we were pleased with the market’s momentum," she says, indicating that Romania’s economy continues to expand, driven by increased consumption, fiscal policies, and available liquidity. However, looking ahead to 2025, "this trend seems contingent on several factors – most notably, the absorption of EU Recovery and Resilience Facility funds, which specialists frequently cite as a key future driver of investment for Romania."
Furthermore, Chitu says that 2025 has already brought both positive developments and challenges. "On one hand, Romania’s strategic role in CEE is growing, particularly due to geopolitical instability worldwide. This trend was already noticeable in recent years, but, in particular, we are now seeing increased FDI screening, especially in strategic industries, which makes sense given the region’s heightened importance."
At the same time, Romania’s electoral cycle – with upcoming elections – has created significant political noise. "While we haven’t necessarily seen deals being canceled outright, investors are being more cautious in their decision-making, assessing whether the timing is right for transactions," Chitu shares. Additionally, Romania, "like other CEE jurisdictions, faces increasing budget deficits, which limits government maneuverability and adds pressure to an already complex economic environment. Given this, we expect to see new tax and fiscal policy changes in 2025, which could directly impact the M&A pipeline and overall investment appetite."
Focusing on positives, Chitu reports that Romania has achieved full Schengen integration, which stands to facilitate cross-border trade and the movement of goods. "We also expect increased focus on Romania’s OECD accession, which has already prompted several positive legislative changes, particularly enhancing corporate governance standards – not just for state-owned enterprises but for the broader market as well." Additionally, she reports that RRF funds have been a major stimulus for private equity investment. "We’ve seen PE funds in Romania actively tapping into RRF funding, particularly alternative investment funds. This influx of capital is fueling investment activity, especially in Romania’s startup ecosystem, which surpassed the EUR 100 million investment threshold last year." Moreover, Chitu expects to see "intensified defense sector activity, including increased funds allocated to acquiring defense-related assets and solutions."
As for infrastructure, Chitu opines that "Romania must advance its infrastructure agenda, particularly in railways, roads, healthcare, and digital networks. Execution of projects in these sectors is expected to accelerate, driven in part by RRF funds absorption, changes brought by OECD requirements, and broader ESG compliance trends."
Finally, looking at capital markets, Chitu says that "depending on how market conditions evolve, the stock exchange could either benefit significantly from the higher volatility that these changes can bring, or face increased liquidity challenges if investors move away from listed securities to mitigate risks. At the same time, we hope that market reforms and increased investment activity will drive liquidity up and lead to more capital market transactions in 2025," she concludes.
