Bulgaria: Eye of the storm

Bulgaria’s lawyers are standing firm amid the political chaos, keeping their focus on steadfast areas such as IP, restructuring and infrastructure

It has been a turbulent year on the political front in Bulgaria. Having ousted the previous government in February, protesters are now attempting to bring down the coalition administration led by prime minister Plamen Oresharki.

Back in February thousands took to the streets to protest about the high cost of utility bills and forced the then-government to resign. An emergency election took place on 29 May, resulting in a socialist-led tripartite coalition with Oresharki at the helm.

But following the formation of the coalition, anti-corruption protests soon sparked up in the streets of the capital, Sofia.

“Certain controversial political appointments in the first days of the new administration led to daily anti- government protests, which continue to date,” says Boyanov & Co managing partner Borislav Boyanov. “This time, young and well-educated people are at the head of demonstrations against the political class, asking for change to the whole political system. And Western diplomats support the protests.” 

M&A: a one-trick pony 

Despite the political instability, firms are pressing on, with plenty of work on their plates.


“The political side isn’t affecting the legal side,” says Wolf Theiss Sofia-based partner Anna Rizova. “Although M&A transactions are not so dependable, there remains a lot of business in areas such as in IP, restructuring, infrastructure and refinancing.”

M&A for the year to date has totalled only €1bn (£850m), with the bulk of the work coming from a single transaction in the telecommunications sector – Norwegian company Telenor’s purchase of Greek mobile operator Cosmote Telecommunications’ Bulgarian subsidiary Cosmo Bulgaria Mobile (Globul), and its local retail chain Germanos Telekom Bulgaria, for a combined value of BGN1.4bn (£605m). This amount represents around 70 per cent of the total value of M&A deals in Bulgaria this year. Cosmo, based in Sofia, is a provider of wireless services and is the second-largest mobile telephone company in Bulgaria. Both Boyanov & Co and Wolf Theiss were involved in the deal, which completed in April.

Another area that remains busy is the energy market, particularly on the renewables side. 

“Energy is still going strong and it plays a significant role in the economy,” says Rizova.

The energy boom has, however, had a negative side. The country has seen too much growth in energy, leading to too many projects and causing the increase in utility bills that led to the February protests. 

Bulgaria, one of the richest sources of renewable energy in Europe, has to find a way to deal with this, which could come through policies such as a tax on renewables.

Investment the priority

There has been growing efforts to seek foreign investment in Bulgaria. The country is the poorest in the EU and has been struggling to recover from the global crisis. GDP growth was just 0.8 per cent in 2012, but positive signs are emerging, with GDP growth expected to double this year, to 1.6 per cent. Subsequent growth is expected to be 1.8 per cent in 2014, 2.9 per cent in 2015 and 3.4 per cent in 2016.

At present, the country is mainly seeing investment from the Netherlands, but investors are also coming from the Middle East, the CEE region, China and the Balkans. 

The government is looking at investment as a key area. For example, Boyanov & Co is advising on a deal involving one of the largest Bulgarian companies on a potential listing on Nasdaq Dubai. This would be the first-ever listing of a Bulgarian company on the Dubai securities market.

“Although the political situation doesn’t look too stable public pressure is pushing the government not only to be socially oriented, but also pro-business,” says Boyanov. “The benefits of Bulgaria such as its geographical location, EU membership and the availability of EU funds, and an educated and inexpensive labour force continue to be available for investors from East and West.”

Key figures: Bulgaria

GDP: $51bn

Inflation: 3%

Population: 7.3m

Life expectancy at birth: 74

Unemployment rate: 12.9%

Source: World Bank, National Statistical Institute