The Brat pack
11 April 2011 | By Joanne Harris
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Firms are hoping that privatisation will give a jolt to the stagnant market in Slovakia.
New governments often herald new flows of business in a jurisdiction, and Slovakia is no exception. When the country’s prime minister Iveta Radicová was elected in July 2010 she announced a fresh wave of privatisation in the country. Its neighbour Czech Republic carried out all its privatisation work a number of years ago, but Slovakia still has a number of wholly or partially state-owned companies ripe for private investment.
According to local media reports, these include Slovak Telecom, heating plants, state-owned bus companies and shares in the Bratislava Stock Exchange. An analysis by the National Property Fund showed that the total privatisation programme is valued at around e403m (£355m).
Salans Bratislava and Prague managing partner Ladislav Štorek says investors are ready to put their money into these companies.
“You don’t have that type of business in the Czech Republic,” he notes.
Law firms are hoping that the privatisation work will help boost a slightly stagnant market in Slovakia. PRK Partners managing partner Martin Kríž says there was little finance or real estate work in the country last year, although he reports “a lot of acquisition work and antitrust work”. Non-cyclical practices including employment and regulatory also held up well.
Much of the acquisition work, says Kríž, involved strategic investors acquiring local businesses. Among the most high-profile was a new joint venture between publishing houses Ringier and Axel Springer, created in March 2010. The Swiss-headquartered business went on to acquire a 70 per cent stake in Slovakian web portal Azet.sk in December 2010 for an undisclosed price.
Allen & Overy (A&O) partner Martin Magál also highlights the Azet.sk deal as one of the pieces of work that kept the firm’s Bratislava office busy in 2010. Meanwhile, he identifies the just-closed sale of 88.71 per cent of Slovak bank Dexia banka Slovensko to Central and Eastern European investment group Penta Investments as one of the most significant deals for 2011. The sale was forced by the restructuring of French bank Dexia.
“In terms of complexity and deal profile it’s certainly the number one deal in M&A this year,” Magál says.
The energy sector has also been relatively busy, with a number of lawyers picking out deals involving heating plants as examples of work. This should accelerate with the proposed privatisations.
Magál also points to the upcoming bid to find a concessionaire for Bratislava Airport. The bidding process is yet to begin so legal advisers have not been selected, but the deal should help keep lawyers’ pipelines full.
Although PRK found real estate to be slow, others are more positive. Kinstellar’s real estate practice was reasonably busy last year, according to local managing partner Patrik Bolf. He says he was surprised at the activity and hopes it will pick up further.
Compared with the Czech market, Slovakia has been relatively stable when it comes to moves between firms. The main victims have been international firms. In early March PRK brought White & Case tax partner Miriam Galandova on board, which Kríž describes as “very good news for us”.
Meanwhile, Havel Holásek & Partners picked up Squire Sanders & Dempsey partner Peter Šuba to be the first partner in its Slovak office. Squire Sanders also lost partners Adrian Barger and Roman Prekop, who left to set up boutique Barger Prekop Attorneys at the beginning of 2011.
There have not been many other moves recently in the Bratislava legal market since the withdrawals a few years ago of Freshfields Bruckhaus Deringer and Linklaters. A&O and White & Case are the principal international players present in the country, while most other firms do Slovak deals from the Czech Republic.
Since cross-border investment is on the rise this is less of a handicap than it might previously have been. However, firms on the ground in Slovakia will certainly benefit from the increased activity generated by the privatisation programme when it kicks in later this year.
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