01 Dec 2018
The content of this interview was first published in Getting The Deal Through, Market Intelligence - M&A, 2018 edition.
GTDT: What trends are you seeing in overall activity levels for mergers and acquisitions in your jurisdiction during the past year or so?
Rachel Vella Baldacchino: Earlier in 2018, the European Commission observed that Malta’s economy is ‘among the fastest growing economies in the EU’, noting that a large part of this is due to ‘exceptional investments in the aviation and energy sectors in previous years’ and ‘several projects in the health, technology and telecommunication sectors’. In this context, the Maltese market for M&A is presently by no means insignificant. Apart from an increasingly healthy M&A market, the trend continues in the listing of shares of Maltese public companies on exchanges both inside and outside of Malta. Following the launch by the Malta Stock Exchange in 2016 of ‘Prospects’, a multilateral trading facility intended to appeal to small- and medium-sized enterprises (SMEs) seeking alternative sources to finance, a number of fully subscribed bond and rights issues have been brought to the market successfully through the Prospects platform. Corporations actively seek external funding and sources of growth, reflecting an increasing trend towards cross-border M&A involving Maltese companies. In the years since the onset of the financial crisis, M&A activity has significantly picked up over less than a decade, progressing from a situation where M&A activity was minimal, to one that reflects the buoyant state of the Maltese economy, in particular that of the services sector.
GTDT: Which sectors have been particularly active or stagnant? What are the underlying reasons for these activity levels? What size are typical transactions?
RVB: Malta continues to gain momentum as a centre of excellence for doing business and for persons seeking an efficient entry point into Europe, for holding structures to hold assets globally, and for businesses engaged in activities such as payment processing, electronic money issuance, blockchain and distributed ledger technologies (DLTs), gaming, gambling, insurance, aviation and yachting. Sensible regulators with in-depth knowledge of the industries they are responsible for and a willingness to engage with the businesses they regulate, sound regulation and a reasonable fiscal environment have significantly contributed to Malta showing remarkable resilience in the face of the global financial crisis.
The transactions involving Maltese companies, buyers or sellers that receive the highest press coverage relate to the remote gaming and banking industries. Typical transaction sizes are not always publicised and figures do vary widely across sectors and businesses, however some recent transactions in the online gaming sector have reached values beyond the €1 billion mark. The recent acquisition in 2016 of an 80 per cent stake in Malta-based Tipico Group companies by private equity firm CVC Capital Partners, for a valuation of Tipico of €1.3 billion, is of particular note, serving as a clear marker of the wave of mega-deals in the online gaming and betting industry that remains clearly discernible into mid-2018.
The whole interview can be read here.