Business Review Issue 35, December - January

INTERVIEW: Jean Francois Fallacher, CEO of Orange Romania, tells BR that access to fixed networks and the registration of pre-paid card users will be major concerns of the telecom industry next year »page 18

ROMANIA’S PREMIER BUSINESS MAGAZINE

DECEMBER, 2014 / VOLUME 18, NUMBER 33

DIGITAL AGENDA 2020 WITH BENEFITS COMES RESPONSI BILITY, CONCLUDED PUNDITS AT BR’S TELECOM EVENT. THEY DEBATED THE TARGETS THAT ROMANIA MUST MEET AS PART OF THE DIGITAL AGENDA 2020 AND NETWORK COVERAGE PLANS » PAGE 30

Despite cautious optimism at the beginning of 2014, most M&A professionals say activity is picking up. The Romanian market is still dominated by small to medium deals, with slightly increasing values. Experts expect the overall volume of the 2014 M&A market to remain close the EUR 1 billion mark » page 19 NEWS

ONLINE

Business year in review

Web wise

BR reviews the main events and developments that marked the evolution of the business year that is drawing to an end

» page 10

BR took the pulse of the international tech community at How to Web, talking to angel investors, seed fund and Sillicon Valley accelerator reps

» page 32

www.business-review.eu Business Review | December, 2014

NEWS 3

NEWS in brief

Contents 5

Vodafone to have full 4G coverage at the Bucharest underground by yearend

6

What next on Romania’s political scene?

10 Local agriculture blooms on good weather 11

Aquisitions reshape local banking landscape

12

Energy sector sees large IPO

14 Consolidation, the word for telecom in 2014 15

Local IT, between growth and corruption scandals in 2014

ENERGY

sum will rise to RON 1,050, meaning RON 6.23 per hour.

16

Real estate market maintains steady growth in 2014

17

Retail slows down expansion

Ukraine’s Vikoil Ltd opens branch in Romania

British EMBA to launch in Cluj

18 Orange Romania CEO: “We will keep the same level of investments”

The Babeş-Bolyai University, University of Hull in the UK, Banca Transilvania and Electrogrup will launch a British program of international business studies in Cluj-Napoca in February. The EMBA (Executive Master of Business Administration) is aimed at businesspeople with at least three years of experience. According to officials, professors from the University of Hull will deliver the course, which will be based on British teaching and examination methods. The MBA is accredited by AMBA International (the Association of MBAs) and AACSB (the Association to Advance Collegiate Schools of Business).

19

Kiev-based Vikoil Ltd, specialized in geological prospecting, opened a branch in Romania, the only one outside Ukraine, which targets activities in the onshore and offshore prospecting of oil and gas, mainly in the unconventional category, reports economica.net. The company, the largest of its kind in Ukraine, is owned by Serghei Ushniskiy. The Romanian branch will be managed by Vladimir Gryshanenko The company’s main activity is 2D and 3D seismic prospecting to research and prospect oil and gas fields.

FINANCING EBRD lends Eti EUR 23 million to finance Craiova plant The European Bank for Reconstruction and Development (EBRD) will grant a EUR 23 million loan to Turkish company Eti to co-finance the construction of a biscuit and cookie factory in Craiova, the lender announced. The cost of the total investment in the plant stands at EUR 40 million. The Craiova plant is Eti’s first production capacity outside of Turkey. Eti owns seven plants in its home country, where it manufactures 45 brands of biscuits, cookies and chocolate. Almost 10 percent of its production is exported.

HUMAN RESOURCES Romania to raise gross minimum wage to RON 1,050 next year Romania will increase the gross monthly minimum wage in two stages in 2015, to RON 975 in January and to RON 1,050 six months later in July, according to a draft bill drawn up by the Labor Ministry.

The currently level is RON 900. From January 1, the gross minimum wage guaranteed by the state will be RON 975, for a full-time work schedule of 168 hours and 40 minutes per month, representing close to RON 5.8 per hour, according to the draft. The document also stipulates that from July 1, 2015, the

Romanian M&A market recovers after economic crisis

30 Strict targets and massive investments line IT&C road 32 ‘Sales and marketing is a big problem in Romania’ 32 ‘Startups need to get to a conditional yes’ 33 ‘The startup community is seen as higher risk’ 33 ‘Romania attracts a lot of Hub:raum’s interest’ 36 ‘Tis the season to be giving 38 ‘There’s an infinity of urgent themes to be tackled by theater’ 40 Putting Romania on the map: cultural festivals 42 Cultural calendar 2015 44 Big box office: the ten highest-grossing local movies this year

IT Bucharest blazes ahead of Europe with broadband speed Bucharest is the leader of the pack in a ranking of European capitals based on the average internet connection speed. Users in Romania’s capital can enjoy higher speeds than the residents of Paris, London or Berlin, according to a study from broadband services supplier Hyperoptic, quoted by ISPreview and Mediafax. Bucharest offers an average broadband speed of 81.18 Mbps, according to the Hyperoptic rankings, which covers 33 European capitals. The number includes both company traffic and household usage.

Paris, with an average speed of 78.15 Mbps, comes in second, followed by Vilnius (Lithuania) with 60.14 Mbps, Stockholm (Sweden) with 58.37 Mbps and Berne (Switzerland) with 51.19 Mbps.

MEDIA Intact ordered to pay RCS&RDS EUR 1 mln in libel case The Bucharest Court of Appeal ruled that Intact waged a libelous campaign against its competitor, RCS&RDS. The court ordered Intact to pay EUR 1 million in “moral damages”. The media group must also broadcast the ruling on its channels over entire month, as a

ISSN No. 1453 - 729X FOUNDING EDITOR Bill Avery PUBLISHER Anca Ionita EDITOR-IN-CHIEF Simona Fodor JOURNALISTS Otilia Haraga (senior journalist), Simona Bazavan, Oana Vasiliu COPY EDITOR Debbie Stowe PHOTO EDITOR Mihai Constantineanu LAYOUT Beatrice Gheorghiu ART DIRECTOR Alexandru Oriean PUBLISHER Bloc Notes Media ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania

EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi SALES & EVENTS Sales managers: Ana-Maria Nedelcu, Oana Albu, Raluca Comanescu MARKETING Ana-Maria Stanca, Ana Maria Andrei, Iulia Mizgan PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 EMAILS editorial@business-review.ro sales@business-review.ro events@business-review.ro

www.business-review.eu Business Review | December, 2014

4 NEWS

NEWSin brief piece of news and in the crawl every hour. Intact can appeal against the decision, which will be applied only when it becomes final, according to Paginademedia.ro. The conflict between Intact’s Antena channels and RCS&RDS started in April 2012, when RCS&RDS removed Antena 1, Antena 3 and Euforia from its Digi DTH platform on financial grounds. Antena Group allegedly asked RCS&RDS for EUR 7 million a year to broadcast its channels via the Digi DTH network. The latter declined and decided to drop the channels from its program. In response, Antena 1 and Antena 3 repeatedly libeled RCS&RDS, calling the latter’s decision to drop the Antena channels “abusive.” RCS&RDS subsequently took Intact to court.

PHARMA

ONLINE

Alesonor sells first houses from Amber Gardens

eMAG fined EUR 388,000 in Bulgaria for unfair competition The Bulgarian Competition Council fined Dante International, owner of online retailer eMAG, BGN 758,300 (EUR 387,500) for unfair practices during two promotional campaigns, according to the Sofia Globe, quoted by Mediafax. eMAG was fined for commercials promising the biggest sale of the year. The retailer was ordered to pay BGN 551,550, representing 4 percent of its income in 2013, for its Black Friday campaign. The Council fined the firm another BGN 206,300, or 1.5 percent of its 2013 income, for the “Tassimo 1+1” campaign, under which customers who bought an espresso machine received a second as a gift. The council ruled that under Bulgarian law, the gift was higher than the maximum allowed value and “distorted the competitive environment”. eMAG called the Bulgarian authorities’ measure “abusive and unjust” and said it would appeal.

Netopia mobilPay introduces Bitcoin payments Netopia mobilPay, one of the biggest online payment processors in Romania, announced the integration of transactions using Bitcoin, the most widely used virtual currency in the world.

Over 6,000 partner retailers will now be able to process Bitcoin, without added development costs, reported wall-street.ro. According to mobilPay representatives, the company will process Bitcoin through a partnership with BTCXChange.ro, the local Bitcoin trading platform, which currently has 3,000 users and has traded USD 2.5 million worth of the virtual currency in 2014.

Dona drugstore chain puts EUR 1.5 mln into redesign

35,000 sqm mall from its developer, Raiffeisen Evolution, at the end of October for EUR 148 million. Raiffeisen Evolution had invested EUR 130 million in the project. NEPI also announced that it has completed the acquisition of approximately 1.2 hectares of land adjacent to the Promenada Mall which will be used to expand the shopping center and build class A office space. The seller is the Romenergo Group, controlled by Romanian businessman Dragos Bilteanu, and the land currently hosts the company’s headquarters.

The Dona network opened its fifth pharmacy in Bucharest with a new design in Piata Gemeni. The initiative is part of a comprehensive process of decorating and remodeling across the entire network, announced at the beginning of the year. So far, 30 pharmacies in 17 towns and cities have been redesigned, at a cost of up to EUR 1.5 million. The design was done by Matius Studio, a specialist in architecture and retail branding.

RETAIL

PROPERTY

LC Waikiki plans two more units for local market this year

Alesonor completed in November the first six houses from the Amber Gardens high-end residential project it is developing close to Bucharest in the OtopeniTunari area. Out of these, four have already been sold, according to the developer. Amber Gardens is the first largescale high-end residential project consisting of energy-efficient “passive houses”, according to company representatives. The residential project will consist of 60 high-end houses which will be completed over the next three years.

Active in Romania since 2003, Greek developer Alesonor has invested in highend residential and office projects such as Magnolia Residence, Almond Tree Residence, Black Tulip Residence and Ivy Office.

Globalworth buys first Green Court Bucharest building Skanska has sold the first building from its Green Court Bucharest office project to Globalworth Real Estate Investments for EUR 44 million, the developer announced. The acquisition is scheduled to be closed in the second quarter of 2015. Officially completed this October, the 19,500 sqm (GLA) building is 91 percent leased. Green Court is Skanska’s first project in Romania.The construction of the first building and the foundation of the second required a EUR 46 million investment, company representatives previously announced. Globalworth Real Estate Investments is controlled by Greek businessman Ioannis Papalekas.

NEPI raises EUR 100 mln for acquisition of Promenada Mall South African New Europe Property Investments (NEPI) announced a EUR 100 million equity raise to fund the recently announced acquisition of the Promenada Mall in Bucharest. NEPI bought the

LC Waikiki opened its ninth store in Romania and its fourth store in Bucharest.

The firm’s new outlet in Plaza Romania began operating in December, following a USD 1.5 million investment, said company officials. By the end of 2014, the retailer is planning to open two new shops in Romania, capping an overall investment of around USD 4.5 million in expanding its network this year. LC Waikiki posted USD 22 million of gross sales in Romania in 2013 and is looking to expand its network over the following months, both in Bucharest and in other major shopping centers across Romania.

By the end of 2014 the company is aiming to sell more than 2 million items nationwide through the existing network.

Burger King returns to Romania as part of European expansion plans Burger King Worldwide Inc. has entered into a joint venture to help expand its business in Romania, Poland, Italy and Greece, writes CNBC. The restaurant operator said that the joint venture, called Burger King SEE SA, has signed a long-term master franchise and exclusive development agreement that includes sub-franchise rights for all of the markets.

Its plan is for the joint venture to aggressively develop Burger King restaurants across Southern and Eastern Europe and create more than 10,000 new jobs within the first five to seven years of the venture. Burger King is already present in Poland and Italy, and will return to Romania after leaving in 2012 following the insolvency of the local branch. Burger King previously entered the Romanian market in 2008 and the fast food operator ended 2010 with a loss of EUR 1.27 million, higher than the EUR 1.13 million loss in 2009.

At the end of 2010, it had a staff of 153 and only eight restaurants in Romania.

The brand was brought to the country by investors Marius Nasta and Eli Davidai.

MONTH AHEAD December 13 New labelling system for food products

The European Union has mandated that the food labelling system must change as of today. The new labels will provide more information in a bigger font to make them more visible. They also need to specify what allergenic ingredients the product contains and its country of origin. Retailers have six months to comply with the new standards.

December 15 Transport Master Plan The latest revised version of the Transport Master Plan will be presented by the government for its first reading.

The strategic document under which Romania can receive European funding for big infrastructure projects, valid until 2030, includes as main objectives the construction of over 650 km of motorway and over 2,200 km of express road.

December 21 Parliament votes on the budget PM Victor Ponta announced last week that he hopes the 2015 budget will be voted in by Parliament on December 21.

The new budget includes a 1.83 percent deficit, as agreed by the Bucharest authorities, the International Monetary Fund and the European Commission.

The three parties involved in negotiations are also banking on 2.4 percent economic growth for Romania in 2015.

December 21 - 22 Klaus Iohannis assumes office President-elect Klaus Iohannis will be sworn into office, assuming the role of head of state. The former mayor of Sibiu won the presidential elections on November 16 with 54.5 percent of votes to Victor Ponta’s 45.5 percent.

January 1 New gross minimum wage goes up

MOST READ www.business-review.eu 1 Enel Energie GM commits suicide by jumping off HQ building in Bucharest

2 Netopia mobilPay introduces Bitcoin payments

3 Enel Romania confirms death of GM, refers to it as an accident

4 EU grants Romania an extra EUR 260 million for highway projects

5 Mariana Gheorghe, OMV Petrom: Black Sea is back on oil & gas map

www.business-review.eu Business Review | December, 2014

NEWS 5

Vodafone to have full 4G coverage at the Bucharest underground by yearend Higher mobile data adoption and smartphone penetration and pushing the M-Pesa service forward are the main drivers in the Vodafone strategy for next year. Giovanni Chiarelli, technology director at Vodafone Romania, tells BR that by the end of the year, the operator will be providing 4G speeds in all Bucharest underground stations.

Do you plan to launch 4G services on the underground?

We currently cover with 2G and 3G 100 percent of the Bucharest underground stations and tunnels. In terms of 4G coverage, we cover 53 stations out of 56 in the M1, M2, M3 and M4 tunnels. By the end of the year, the 4G coverage will reach all the underground stations and tunnels.

∫ OTILIA HARAGA What are the priorities for the network development in 2015?

We will continue to expand our 4G coverage and to add more services to our performing 4G network. Vodafone Romania is currently covering 45 percent of Romania’s population with 4G services, while 4G+ is being deployed in six big cities: Bucharest, Brasov, Cluj, Iasi, Timisoara and Ploiesti. Vodafone Romania’s 4G network covers 100 percent of the population in 19 major cities: Bucharest, Timisoara, Cluj, Brasov, Constanta, Iasi, Craiova, Arad, Bacau, Ploiesti, Pitesti, Sibiu, Baia Mare, Botosani, Buzau, Galati, Oradea, Targu Mures and Braila.

In the next financial year, we will continue to grow our 4G and 4G+ coverage in Romania’s key cities and major tourism destinations.

We will continuously enrich the Supernet umbrella, both on 4G and on 3G. (…) Our focus will also be to strengthen our position as market leader on the enterprise segment.

What are Vodafone’s investment priorities next year?

We want to get every Romanian on the internet. Thus, since the launch of Supernet, we have seen a growth of over 150 percent in terms of mobile data usage on smartphones.

We are constantly investing in Romania, each year, and now we add a supplementary EUR 55 million investment into our network and our stores over the next two years, as part of the Spring program.

We will continue to focus on grow-

ing the mobile data adoption, smartphone penetration, and M-Pesa, while also concentrating on our main network differentiators, in the 4G and 4G+ area.

Are there any plans to provide TV services in Romania next year?

We already provide access to TV, video and music content through our partnerships with SeeNow and Zonga; cross-platform apps powered by Vodafone.

Are there any plans to offer fixed telephony services for the consumers?

Aside from the business customers, Vodafone Romania’s consumer subscribers benefit, since May 2012, from fixed internet and voice services, through integrated solutions that provide broadband internet connections and fixed telephony services.

otilia.haraga@business-review.ro

www.business-review.eu Business Review | December, 2014

6 POLITICAL YEAR

What next on Romania’s political scene?

With the EU parliamentary elections in May and the presidential election in November, Romania has had a turbulent political year in 2014. The economy has fully felt the effect of this and the business environment is now looking forward to what should be a stable and more predictable year. However, recent political developments hint at more turmoil to come.

President-elect’s message gained momentum in the last two weeks of the campaign – especially via social media – following anger over the way the government had organized the voting process for citizens abroad.

∫ SIMONA BAZAVAN “The campaign is over and now we need to begin work,” president-elect Klaus Iohannis, head of the National Liberal Party (PNL), the main opposition party, told Romanians in his victory speech on November 16. The 55-year-old former physics teacher, who had served as mayor of Sibiu since 2000, had just won an unexpected victory against Victor Ponta, Romania’s PM and head of the ruling

Social Democrat Party (PSD). The ap- uncharismatic by Bucharest political pointment will become official on De- standards.

Despite the PSD’s nationalistic cember 21 when he will be sworn in, replacing Traian Basescu who has campaign and religious attacks on his held the position for two consecutive opponent, Iohannis managed to score important points due to public dissatterms.

Ponta had initially started isfaction with the government, and the campaign as favorite, even an overall disillusionment with local leading some of the exit polls politicians. He promised Romanians released after the second round he would be a different kind of presiof voting. An ethnic-German and dent promoting a different way of an Evangelical Lutheran in a doing politics, and that this will lead largely Orthodox Christian country, to a different kind of Romania, one of Iohannis was perceived by some as “things done properly”.

His message gained momentum in the last two weeks of the campaign – especially via social media – after anger over the way the government had organized the voting process for citizens abroad erupted into street protests across the country. Thousands of Romanians waited in line for hours to vote in polling stations across Europe with many unable to cast their ballot by the time polling stations closed.

continued on page 8

www.business-review.eu Business Review | December, 2014

7

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www.business-review.eu Business Review | December, 2014

8 POLITICAL YEAR continued from page 10 The government failed to remedy the situation by the second round of elections, blaming the queues on the unexpected turnout.

Back home the turnout was unexpectedly high as well – approximately 62 percent, the highest level since 1996.

In the end Iohannis won by an unexpected and comfortable 54.5 percent of all votes, meaning that he beat Ponta by approximately one million votes. What should be noted is that even without the votes obtained outside Romania – where he won by a staggering 89.7 percent of the 379,000 cast votes – he would still have defeated his opponent.

Clinging to power Soon after conceding defeat to his opponent on the night of November 16 following the second round of elections, Ponta stated that he saw no reason to resign as PM. Given that the PSD and its allies hold the majority in Parliament and the next parliamentary elections will take place in 2016, Ponta could indeed maintain his position. However, by the end of November the ruling coalition had suffered its first loss after the UDMR, a Romanian ethnic Hungarian party, said it would leave government.

Alongside the Conservative Party (PC), the National Union for Romania’s Progress (UNPR) and the Liberal Progressive Party (PLR), the PSD still maintained a 60 percent majority in parliament, but opposition leaders suggested that this could well change.

"Everybody wants to be on the winning side. So, it is possible that during the coming weeks or months we will see changes in Parliament," said Iohannis at the end of November.

With more PMs abandoning the ruling coalition by the end of the year, Ponta’s government is looking at an uncertain future in 2015. "So it's possible that during 2015 we will have this shift which could give the PNL a majority, which it would then use to change the government,” the president-elect told Reuters.

"Everybody wants to be on the winning side. (…) So it's possible that during 2015 we will have this shift which could give the PNL a majority, which it would then use to change the government,” president-elect Klaus Iohannis

After loosing the elections, Victor Ponta stated that he saw no reason to resign as PM

Moreover, Ponta faces uncertainty within his own party next year. In the PSD’s first official meeting after its defeat, it was decided that a party congress to elect new leadership would be held in March. Following the same meeting, three preeminent party members – Mircea Geoana, the PSD’s losing presidential candidate in the 2009 elections and former party president; Marian Vanghelie, mayor of Bucharest’s Fifth District; and Dan Sova, a former party spokesperson – were ousted for their public opposition to the party’s leadership. Scandal erupted soon after, with many analysts attributing this to what they called the PM’s desperate cling to power and the party’s dire need for internal reform.

By early December, Ponta had gone back on his pledge to resign after the National Anti-corruption Directorate (DNA) took over the investiga-

tion into the irregularities reported during the voting process in the diaspora. “Should the DNA start a criminal investigation against me, against Titus Corlatean (e.n. former external affairs minister) I will definitely resign,” the PM had said, according to Mediafax. Ponta conceded that the elections were “poorly organized” outside Romania but said that it was all an “unintended error” and not a premeditated attempt to undermine voting abroad.

The government’s priorities for 2015 By the end of November the most pressing matter on the government’s agenda was drafting the 2015 state budget and having it passed

by Parliament. The PM had also announced plans for a government reshuffle.

Who voted for Iohannis?

A staggering 70.1 percent of Romanians aged between 18 and 30 voted for the PNL president on November 16, according to a Curs – Avangarde analysis. His popularity dropped among older voters, with the former mayor securing 54.9 percent of votes cast by those aged between 31 and 60 and only 31.3 percent of those aged above 61. Overall, he was voted for by 52.1 percent of both men and women and 56.3 percent of Romanians living in urban areas.

His popularity dropped in direct correlation with voters’ education level.

Some 68.2 percent of Romanians with a university diploma and 54.6 of those with a high school diploma

voted for Iohannis, while only 35.3 percent of those without a high school diploma cast their vote for the new president.

By geographical and historical regions, Iohannis was voted for by 64.8 percent of Romanians living in Transylvania, 46.1 percent of those from Moldova and 39.4 percent of Muntenia inhabitants. In the capital Bucharest he took 58.2 percent.

A surprising fact is that Iohannis was voted for by 85.1 percent of the Hungarian minority, despite the fact that the Hungarian party, the UDMR, was part of the ruling coalition alongside the PSD until late November.

Calin Popescu Tariceanu, president of the Romanian Senate and head of the PLR, said in early December that the 2015 state budget would be adopted by Parliament by December 20 and that the government reshuffle should normally follow.

“We’ve already discussed the schedule for activities related to the budget, meaning negotiations between the government and the International Monetary Fund (IMF) and then sending the draft to the Parliament. (…) We’ve set a target to finish these proceedings by December 20,″ he stated. Tariceanu’s statement came after the delegate minister for the budget, Darius Valcov, said on November 26 that the budget would be completed by the end of November and should be sent to Parliament on December 10.

Further delays are expected after it was revealed in early December that the negotiations with the IMF and the European Commission (EC) had turned tense. The two institutions had allegedly asked the Romanian government to push to reduce the deficit to 0.9 percent of GDP in 2015, a demand which local authorities called unacceptable, according to Mediafax.

62 % The turnout in the second elections round, the highest level since 1996

As for plans to reshuffle the government, the new cabinet is due to be announced by December 20 as well.

The UNPR, PC and PLR, which has recently joined the ruling coalition, are expected to get two seats each and the rest will be appointed by the PSD. The new government will see not only new ministers but some new ministries as well, according to media reports.

Regardless of who gets which brief or whether Ponta resigns, the new government will have a hard job next year. After a turbulent 2014, the business community is hoping for some much needed stability and predictability and for a shift of attention towards the local economy.

There will be no tax increases in 2015, promised Ponta, and there is even talk about cutting VAT on some products. By what means this could be achieved while still meeting the deficit target and allocating money to investments remains unclear. Debate has yet to reach this level as local politicians remain more concerned about scrambling for position in the aftermath of the elections and less about the economy. simona.bazavan@business-review.ro

www.business-review.eu Business Review | December, 2014

10 BUSINESS YEAR IN REVIEW

Local agriculture blooms on good weather The most important event for the local agriculture sector this year by far has been the negotiation and coming into force of the National Program for Rural Development (NPRD) for the period 2014-2020, which regulates how local farmers can gain access to the EUR 8 billion of EU funds available for investment projects until 2020.

In the meantime, Romania has reported a good agricultural year, albeit, as before, mostly the result of good weather conditions. ∫ SIMONA BAZAVAN High production but low productivity First estimations point to a good agricultural year in 2014 with most crops reaching higher production levels than last year.

Romania is expected to report a wheat production of some 7.37 million tons in 2014, below the initial estimation of 8 million, but still slightly above last year’s level, according to data from the Ministry of Agriculture and Rural Development (MADR).

Corn production is projected to reach approximately 11 million tons, which would make Romania the second biggest producer in Europe behind France.

Despite such a high ranking, Romania continues to report some of the lowest yields in the EU. Some 2.5 million ha of land are cultivated with corn in Romania, the highest surface of all EU members, however the production is below that of countries that cultivate smaller surfaces. The average yield is 4-4.5 tons/ha while France reports an average of 8 tons/ha, Daniel Constantin, Romania’s agriculture and rural development minister, said this September.

Land fragmentation remains the main factor behind the low productivity. About half of Romania’s farmland is today divided between 97 percent of the country’s farmers, but through the new NPDR and new rules for the allocation of farming subsidies, the government hopes to change this.

Some of the subsidies Romanian farmers will be receiving through to 2020 will be conditioned by their joining a farmers’ cooperative or farmers’ group. The MADR is also working with the Ministry of Finance on coming up with a fiscal exemption that would apply to all transactions inside a cooperative, MADR representatives announced in 2014. All this should result in the creation of clusters made up of small farmers, which in turn would improve productivity.

Bits and pieces: Land fragmentation remains the main factor behind Romania’s low productivity

New NPRD promises better targeted investment programs Local authorities have announced that Romania should close the final negotiations over its NPRD by the end of the year. Increasing agricultural production through higher productivity and investments in the production of value-added goods are the main two objectives the Romanian authorities had in mind in drafting the NPRD for 2014-2020, according to ministry representatives.

The program includes 16 measures, down from the 24 in the NPRD for 2007-2013, which officials say should allow a better focus on the needs of local farmers. Special focus will be given to investments in production for both small and large farms, with a dedicated program for investments in orchards, the integration of production chains and incentives for young Romanians looking to set up a farming business in rural areas.

The new NPRD also comes with the promise of simplified and more

flexible application procedures and less bureaucracy. As part of this attempt, an online application tool was made available this May along with a price reference list for equipment acquisition. The ministry has also committed to scaling back the control of beneficiaries to a minimum.

The NPRD was drafted within the context of a reformed Common Agricultural Policy (CAP) which takes into consideration the specific structural situations of different EU member states and allows each country to spend EU funds based on its own development strategy. The CAP reform was the work of Romanian EU commissioner for agriculture and rural development Dacian Ciolos. His term ended this year and in November Phil Hogan took over the position on behalf of Ireland.

In addition to the new NPRD, Romanian farmers also saw changes to the subsidies system in 2014.

As of this year, Romanian farmers started receiving higher subsidies in the form of the single area payment

scheme. Over 2014-2020, Romania will have access to some EUR 10.6 billion in direct payments, up by 47.5 percent compared to the 2007-2013 period.

First call for projects under NPRD 2014-2020 This May the MADR launched the first call for projects under the NPRD for the period 2014-2020.

Under the first call for projects, farmers could apply through Measure 121 – the modernization of farms, for which EUR 150 million is available.

Out of this, EUR 35 million has been allocated to family farms, and another EUR 15 million is being provided for the meeting of quality standards in the zoo-technical sector. The remaining EUR 100 million is divided equally between vegetal and animal farms with separate allocations for equipment acquisition and the construction or modernizations of facilities. simona.bazavan@business-review.ro

www.business-review.eu Business Review | December, 2014

BUSINESS YEAR IN REVIEW 11

Aquisitions reshape Enel launches new local banking support services landscape for domestic PARTNER CONTENT

Announcements of two takeovers are reshaping the local banking sector, while EBRD’s acquisition of an equity stake in the Bucharest Stock Exchange is giving new impetus to the local capital markets development.

Acquisitions point to consolidation moves in banking sector Banca Transilvania, Romania’s third largest lender, announced it was acquiring the majority share package for Volksbank Romania from Volksbank, DZ Bank/AG, WGZ Bank AF in Germany and BPCE in France. Banca Transilvania and Volksbank will function as separate entities until the transaction is finalized, after which the Austrian bank’s local unit will be integrated into BT’s operations.

According to reports by Bloomberg, the parent company of Volksbank Romania was looking to sell in order to lower its deficit but discussions are still in the early stages and may not even formalize. Banca Transilvania reported in August a net profit of RON 212 million (EUR 48 million) for the first half of the year, up 17.7 percent on the year, fueled by a rise of the net interest margin.

Earlier in the year, OTP Bank Romania had started the integration process for the local subsidiary of Portugal’s Millennium bcp. OTP Bank Romania, a member of Hungarian group OTP, acquired Millennium BCP in a deal worth EUR 39 million which includes shares and integration cost.

Millennium Bank has a portfolio of 80,000 clients and a network of 56 offices and 58 ATM’s. After integration, OTP will have 400,000 clients, 150 offices and over 160 ATM’s.

At the beginning of the year Spanish lender Caixabank closed down its Romanian subsidiary. The bank entered the local market in 2007 with hopes of becoming a significant player on the corporate segment. The bank reached break-even in 2011 and reported a net profit of RON 8.6 million (EUR 1.9 million) in 2012, according to data from the Ministry of Public Finance. The local subsidiary has financed a series of real estate projects, and some of them have filed for bankruptcy such as Laguna Residence, developed by GEA.

EBRD buys equity stake in the BVB The European Bank for Reconstruction and Development (EBRD) has acquired a 4.99 per cent stake in the Bucharest Stock Exchange (BVB), the

largest in South-Eastern Europe.

With this equity interest buyout, the EBRD says it is supporting the Romanian government’s comprehensive capital market development program, which aims to improve the functioning of the local capital markets, enhance liquidity and increase availability of debt and equity offerings in the local capital markets. Romania has set a goal for the stock exchange to be upgraded to emerging market status – whereby Romanian stocks would be included in the MSCI Emerging Markets Index –from its current placement in the MSCI Frontier Markets Index. The EBRD will support legal and regulatory reforms to help achieve this goal.

The Bucharest Stock Exchange has been listed on its own market since 2010. As of September 2014 it listed 83 companies including the largest corporation in Romania OMV Petrom, Romgaz, Fondul Proprietatea, BRD Groupe Societe Generale, Banca Transilvania, Electrica and Transgaz. The total market capitalization is almost EUR 30 billion.

Scandal stirs insurance industry Former Financial Supervision Authority ASF president, Dan Radu Rusanu, businessman Ilie Carabulea and Marian Marzac, former member of ASF’s board, were indicted for their involvement in the “Carpatica File” and are charged with acts of corruption.

Ilie Carabulea, owner of SC Atlassib SRL and SC Transcar SRL, was charged with setting up a criminal group, trading in influence, bribery, using confidential information, forgery instigation, according to a press release from the National Anticorruption Authority. Marian Marzac, former director of SC Carpatica Asig SA, was accused of constituting an organized criminal group, trading in influence, accepting bribery, abuse in service against public interests. Dan Radu Rusanu was charged for taking part in organized criminal activity, influencing statements, favoring the offenders, using his influence for personal interests and in exchange of material goods. editorial@business-review.ro

residential clients Power company Enel announced it was introducing on the Romanian market a new range of assistance services for domestic repairs and interventions targeted at the residential clients of Enel Energie Muntenia and Enel Energie.

The service will allow clients to receive assistance at affordable prices and to access a network of professionals from varied fields, 24/7.

Customers can benefit from a promotional period of up to four months for the service. The service, launched in partnership with Europ Assistance, is called Enel Asistenta.

The Enel Asistenta option offers a wide range of services: repairs and interventions to indoor electric installations, locksmith repairs, and electric boiler repairs through a network of specialized companies managed by Europ Assistance.

Moreover, the customers who choose the Enel Asistenta+ option receive an unlimited number of interventions per year and a vehicle towing service.

The Enel Asistenta package, which offers residential clients access to maximum 2 requests per year is priced at RON 11.99 /month, including VAT. The Enel Asistenta+ package, which offers residential clients access to an unlimited number of requests per year, is priced at RON 23.99/month, including VAT. For any of the two packages, the cost of an intervention covered by the subscription can reach a maximum of RON 450.

Moreover, customers with an MyEnel account benefit from a twomonth promotional period of Enel Asistenta, free of charge, while those who, besides the MyEnel ac-

count, have also the electronic bill option activated, will enjoy four months of Enel Asistenta package free of charge.

In 1963, with the help of Generali Group, Europ Assistance came into being by inventing a totally pioneering concept: assistance, covering risks, accidents, travel and everyday life, reflecting changes in society.

Shored up by 44 companies and branches in 33 countries, Europ Assistance has deployed a network of local experts covering the five continents. To provide its customers with solutions 24/7, Europ Assistance has a staff of 4,700 assistance agents in 35 call centres around the world.

Active on the Romanian market since 2005, Enel is currently the country’s largest private investor in energy, with operations in power distribution and supply as well as renewable energy production. The company has over 3,400 employees and provides services to 2.7 million customers in three key areas of the country: Muntenia Sud (including Bucharest), Banat and Dobrogea, accounting for one third of the electricity distribution market in Romania.

Enel is Italy’s largest power company, and Europe’s second listed utility by installed capacity. It is an integrated player, selling power and gas to around 61 million customers.

Enel operates in 32 countries worldwide, with a net installed capacity of over 95,000 MW and more than 71,000 employees.

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12 BUSINESS YEAR IN REVIEW

Energy sector sees large IPO The IPO of electricity supplier Electrica marked one of the most important moments of the year on the Bucharest Stock Exchange, while the government passed a partial exemption for big industry on green certificates.

Electrica makes biggest IPO in history of BVB The initial public offering of electricity supplier and distributor Electrica raised RON 1.95 billion (EUR 444 million) from selling a 51 percent stake on the capital market. It is the biggest IPO so far in the history of the Bucharest Stock Exchange (BVB).

The final offering price for institutional and large retail investors was set at RON 11 per share (minimum price included in prospectus) and USD 13.66 per global depositary receipts (GDR). The listing was carried out in Bucharest and London. At these prices, Electrica had a market capitalization of RON 3.81 billion (EUR 868 million). Electrica SA is the second Romanian privatized company to be listed in London; Romgaz SA debuted on the main market in November 2013. Following consultations with the global coordinators of the offering, Electrica decided to reallocate close to 6 percent of the shares from large investors to retail investors, taking their tranche to over 20 percent of the offering. For small retail investors, Electrica granted up to 1,000 shares per buyer and provided a 5 percent discount in the first five days of the offering. The company had announced it would invest EUR 1.4 billion in energy distribution network efficiency, automation and expansion by 2018.

Electrica had Citigroup Global Markets Limited, Raiffeisen Bank and Societe Generale as global coordinators and joint bookrunners for the offering. BRD-Groupe Societe Generale was manager and SSIF Swiss Capital the distribution agent.

Enel announces exit from Romania Italian utility firm Enel announced it would seek to sell its distribution and sales assets in Romania, as part of a wider EUR 6 billion asset sale program that was started in 2013, in a bid to reduce the group’s financial debt.

In Romania, the company aimed to sell a 64.4 percent stake in Enel Distributie Muntenia and Enel Energie Muntenia, a 51 percent stake in Enel Distributie Banat, Enel Distributie Dobrogea and Enel Energie, as well as its 100 percent interest in services company Enel Romania, which is controlled through Enel Investment Holding.

The company entered Romania in 2005, when it acquired the electricity distribution and supply companies Electrica Banat and Electrica Dobro-

Corporation (CGN) as investor for the development of two new nuclear reactors in Cernavoda, which will cost around EUR 6.5 billion.

The Chinese company was the only bidder in the tender procedure organized by Nuclearelectrica.

The Chinese investors will hold at least 51 percent of the joint venture, according to the project strategy. At present, the two nuclear reactors in Cernavoda cover roughly 20 percent of Romania’s electricity consumption annually.

Partial exemption for green certificates aquisition

Pundits say renewable producers will be affected by the partial exemption for the aquistion of green certificates

gea, as part of a privatization program pursued by the government. In 2008, it took over the electricity supply of Bucharest through Electrica Muntenia Sud. Enel said these companies had revenues of EUR 1.1 billion and EBITDA of EUR 289 million last year.

They distributed 14TWh of electricity and had sales of 9TWh in 2013. The firm has 2.4 million residential customers in Romania, giving it a market share of 20 percent, while another 200,000 are businesses, with a market share of 38 percent.

The utility firm is also looking to sell its generation assets in Slovakia, where it controls the biggest electricity producer Slovenske Elektrarne.

The company has 5,700 MW in installed capacities comprising nuclear, hydro and thermal facilities. Last year, the Slovak energy company posted revenues of EUR 2.8 billion and EBITDA of EUR 708 million.

Enel aims to raise EUR 4.4 billion from selling its operations in Romania and Slovakia, together with other non-strategic assets, under the debt

reduction plan. The company has already cut its debt by EUR 1.6 billion to date.

Citigroup and UniCredit have been appointed financial advisors for the sale process in Romania.

The firm is also active in the local renewable sector, through Enel Green Power Energy. It had a portfolio of 498MW in wind and another 36W in solar installations at the end of 2013.

More investments announced in oil & gas and nuclear sectors Oil and gas producer OMV Petrom announced it would start the redevelopment of the Tazlau oil field, located in north-eastern Romania, in Bacau County. The project entails investments of around EUR 30 million over 2014-2015.Tazlau is a mature oil field, producing for more than 60 years, with a daily production of below 1 percent of OMV Petrom’s total oil production in Romania.

At the same time, Nuclearelectrica, the nuclear energy power producer, selected China General Nuclear Power

This year, the government approved a state aid scheme worth EUR 750 million that will provide partial exemption for the acquisition of green certificates by large industrial consumers, in a bid to prevent the relocation of production facilities and job losses. The measure, which was lobbied heavily for by the association of big energy consumers, will provide three exemption rates of 40 percent, 60 percent and 85 percent, depending on the energy consumption intensity.

Around 300 companies are expected to benefit from this measure, which is based on the draft guidelines on environmental and energy state aid for 2014-2020 promoted by the EC. The state aid scheme will be managed by the Ministry of Economy. According to energy experts, the exemption will have an adverse effect on renewable producers which will have difficulties in selling their green certificates and keeping their projects profitable.

Pundits commented throughout the year that some renewable projects, interconnections and offshore oil and gas developments have strong potential to attract investments. Romania’s renewable boom has generated over EUR 6 billion of investments over the past five years.

The installed capacities in biomass and biogas had reached 91MW and 9.6MW, respectively, by the end of August of this year. Experts say investors have held back from developing such projects due to additional requirements in securing the right raw materials to power them. Most of them have gathered to the wind and solar sectors, where the installed capacities have reached 2.8GWh and 1.2GWh, respectively. The government’s intervention to cut the incentives for the renewable sector has dramatically reduced the pipeline of new projects. editorial@business-review.ro

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14 BUSINESS YEAR IN REVIEW

Consolidation, the word for telecom in 2014 The telecom market has seen further consolidation in 2014, with a 1.4 percent drop in the mobile phone user base to 22.3 mln and also 1.9 percent drop in landline telephony users to 4.6 mln. Convergent offers, rebranding, network development and the slash in termination rates were major milestones for telecom players year. ∫ OTILIA HARAGA The landline telephony subscriber base dropped 0.8 percent in H1, 2014, to 4 million, while the mobile subscriber base rose 1.3 percent to 9.4 million, according to data from Romanian telecom regulator ANCOM. In 2014, Romania had 9.4 million subscribers and 12.9 million prepay card users.

The mobile telephony penetration rate dropped from 112 percent in June 2013 to 110 percent in June 2014.

Though there were fewer active users, the use of mobile phone services has augmented.

Active broadband connections in Romania rose by 22.8 percent in H1, 2014, to 18.3 million, on the backdrop of a 28.5 percent increase in the number of mobile internet connections to 14.4 million, according to ANCOM. Turning to fixed internet connections, the number went up to 3.9 million at the end of June 2014 compared to 3.7 million at the end of June 2013.

In H1, 2014, there were 5.4 percent more subscribers to paid TV broadcasting services, reaching 6.6 million, compared to 6.3 million at June 30, 2013.

The household penetration rate of TV services was 89 percent.

Approximately 4.2 million subscribers continue to use cable TV, 6 percent more than in 2013.

In second place come DTH networks with 2.37 million subscribers, 4 percent more than in the previous year. IPTV services still have not attracted many clients, having only 65,000 subscribers, 42 percent more than in mid-2013.

Most TV subscribers (61 percent) live in urban areas.

As Romania should make the transition to digital terrestrial television starting June 17, 2015, as part of the agreement it signed in Geneva in 2006, the state organized a public bid last year for the allocation of digital terrestrial TV licenses. The winner was the National Radiocommunication Company, operating under the brand Radiocom, which won three such licenses for EUR 1.02 million. The other contender in the tender was RCS&RDS, which did not win anything.

Recently, ANCOM published the task book for a new public tender that will take place in 2015, which will see

Cosmote and Romtelecom took the German identity Telekom Romania this year

the allocation of two national digital television multiplexes that were not won during the previous procedure, as well as 40 regional multiplexes and 19 local ones.

The slash in termination rates, meant to favor consumers, was a measure that did not go down well with telecom companies, which complained that it came at a time when they needed to make massive investments in their networks.

Orange Romania ended September 30 with a total customer base of 10.5 million customers, expanded its 4G network to over 1,300 localities and over 90 cities, representing 48 percent of the entire population and 78 percent of the urban population, according to data from the operator.

Orange launched 4G in the Bucharest subway as well as 4G+ in six Romanian cities last year.

Orange also made progress in its TV services offering, reaching 110,000 TV customers.

The operator also launched 4G + services in Bucharest, Brasov, ClujNapoca, Galati, Iasi and Timisoara.

The Orange group is no longer interested in acquisitions in Romania but is working on agreements with local fixed players to address the need for fixed, mobile offers, Stephane Richard, CEO of the company, told Reuters.

The same cannot be said about its competitor, Vodafone, which seems to

be actively seeking new opportunities.

According to Reuters, Vodafone is reviewing potential acquisitions, including of Europe’s leading cable operator Liberty Global, which in Romania is represented by UPC Romania.

The Liberty Global acquisition would enable Vodafone to offer TV services in Romania on a par with its main competitors, Orange Romania, Telekom Romania and RCS&RDS. Vittorio Colao, CEO of the British group, said in an interview with Ziarul Financiar that Vodafone was analyzing the option of providing fixed voice and data services to the consumer segment as well as TV services in Romania, which may include a merger or acquisition.

As of May, Vodafone has had a new CEO, when Ravinder Takkar, 45, previously general director at Vodafone Partner Markets since January 2012, replaced Inaki Berroeta.

Vodafone also launched Supernet, which allows higher speeds, network stability and security in the network for customers.

Vodafone had 8,507,439 customers at September 30, 2014.

In July, the firm opened a new Shared Services (VSS) Center in Romania following a EUR 6.25 million investment. The center serves Vodafone operations in five countries, as well as for the Vodafone Group.

The most important event in the life

of Telekom Romania was the name itself, as Romtelecom and Cosmote acquired the German identity of mother company Deutsche Telekom, following an investment of nearly EUR 15 million.

The two companies started working as Telekom Romania, having integrated fixed and mobile shops, a unified call center, one single website, and one social media presence.

Even though they work as one, they are not legally merged, something which DT aims to do in the future.

However, for that to happen, the Romanian state, which has a 46 percent stake in Romtelecom, needs to decide in what way the privatization of Romtelecom must take place. This topic should be high on the government’s agenda in 2015. The state is already late in making a decision: a possible listing of the Romtelecom shares was announced for 2014, but did not happen.

Still last year, Deutsche Telekom made another move with an impact on the Romanian market, namely the completion of the acquisition of GTS Central Europe, which has operations in Romania as well.

Last year marked a repositioning of local operator RCS&RDS. The telecom operator signed a two-year national roaming agreement with Vodafone Romania, as part of the obligations stipulated in the license acquired by operators in 2012.

Even though it activated its 900 Mhz network, which would allow it to provide 4G services, RCS&RDS announced it would stick to 3G for 2014, as it offers the optimum speeds for its consumers.

At the end of September, RCS&RDS entered the Hungarian telecom market with a EUR 32 million bid for a 4G license valid for 20 years, according to Reuters.

Last but not least, UPC Romania’s client portfolio increased from 1.160 million in September 2013 to 1.165 million in September 2014.

The operator launched a Wi-Free service and started providing data transfer speeds of 500 Mbps in Bucharest, Cluj-Napoca, Timisoara, Constanta, Ploiesti, Iasi, Galati and Alba Iulia. The UPC Fiber Power 200 Mbps internet service covers the entire country. otilia.haraga@business-review.ro

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BUSINESS YEAR IN REVIEW 15

Local IT, between growth and corruption scandals in 2014 The Romanian IT market surged by 9.1 percent in 2014 to a total of EUR 1.2 billion, exceeding most countries in the region, but nevertheless the industry suffered a stain on its reputation due to the outbreak of scandals that involved major international and local names in both the local administration and private sector. ∫ OTILIA HARAGA The 9.1 percent progress of the IT sector was attributed to strong economic growth and Romania’s status as a regional center for IT professionals, according to Business Monitor International.

BMI projected that sales of hardware components would increase to EUR 656 million in 2014, from EUR 633 million the previous year, due to the re-invigoration of the PC and notebook market, as well as significant growth in the number of tablets.

The software market was set to reach EUR 271 million in 2014, compared to EUR 249 million the previous year.

Data from the National Institute of Statistics (INS) place the number of employees in the IT field at 45,500 at July 31, having gone up from 41,500 at the start of the year.

According to data that the INS sent to Business Review, revenues from IT services represented 2.4 percent of GDP. Average net salaries in IT went up steadily in the last half year, from RON 3,739 at the end of January 2014 to RON 3,953 at the end of August, according to the INS. In technological innovation, Romania is also making fast progress. It was placed third in Deloitte’s CE Fast50 ranking for 2014 with six companies in the competition: Teamnet, ITNT, Softelligence, Life is Hard, Fortech and Trencadis. Four were new entries. Two of the companies were based in Bucharest, two in ClujNapoca, one in Baia Mare and one in Sibiu.

Romanian IT is increasingly organizing in clusters, which have started to raise their voice for the industry more and more this year. Two meetings between IT clusters from Cluj, Iasi, Timisoara, Brasov, and MiercureaCiuc took place last fall in Cluj and Brasov, where members discussed industry issues and pitched their requests to the authorities.

While Bucharest has been the country’s main IT hub, over the past two years four other locations have increasingly gained importance in the eyes of IT companies. Timisoara, Cluj, and more recently, Iasi and Brasov are emerging as first points of entry for IT companies.

Codes for the future: the Romanian IT market is setting the parameters for a fast development in the region

Two international IT&C corporations are getting ready to enter the Romanian market, which would lead to the creation of 4,500 jobs, according to a statement by Razvan Cotovelea, minister for the information society, quoted by Agerpres.

“We have one IT giant which will come to Romania and generate 3,000 jobs. We have another great corporation which is coming from across the Ocean and will create another 1,500 jobs. I can’t give you any further details at the moment. But what I can tell you is that we will stimulate this sector to give funding to important professional development projects,” said Cotovelea.

However, a series of corruption scandals risked besmirching the image of the local IT industry in 2014.

Microsoft, Siveco and Ultra Pro computers were the names involved in serious corruption and tax evasion cases.

In the Microsoft case, nine local exministers – Ecaterina Andronescu, Valerian Vreme, Serban Mihailescu, Dan Nica, Adriana Ticau, Gabriel Sandu, Daniel Funeriu, Alexandru Athanasiu

and Mihai Tanasescu – faced prosecution following a Microsoft investigation into the lease of its licenses to schools.

The former government officials are charged with a series of offences, including abuse of office and money laundering. The contract under investigation ran between 2004 and 2009.

Former communication minister Gabriel Sandu, businessmen Dorin Cocos and Nicolae Dumitru and the mayor of Piatra Neamt, Gheorghe Stefan, were temporarily taken into custody in the Microsoft case.

In July 2014, the DNA started an investigation in rem into influence peddling related to corruption, bribery and abuse of office, regarding the licenses investigations.

The investigation found that out of the USD 54 million that was paid by the government under the licensing contract and its extensions, commission paid to public officials amounted to USD 20 million.

Another important name on the IT market, Siveco, was suspected of creating a criminal network that robbed

the state of an estimated EUR 10 million by supplying fake IT services through various companies created especially for the purpose.

Irina Socol, president of the company at that time, was taken into custody and later placed under house arrest. In mid September, Siveco announced that Florin Ilia had been appointed president of the administration board and general manager of the company.

The Romanian IT retail scene was also shaken by a corruption scandal.

The Fughina spouses, Cristian Fughina’s father, Stefan Fughina, and businessman Laszlo Kiss are suspected of taking out over EUR 10 million from the accounts of Ultra Pro Computers and transferring the money into several offshore accounts.

The Fughina spouses and Laszlo Kiss were detained by the prosecutors of the Directorate for Investigating Organized Crime and Terrorism (DIICOT), on money laundering and embezzlement charges. otilia.haraga@business-review.ro

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16 BUSINESS YEAR IN REVIEW

Real estate market maintains steady growth in 2014 The total property investment volume in Romania increased to approximately EUR 1 billion in 2014, marking the highest annual level since 2008, according to pundits. Office has been by far the best performing real estate sector but there is good news coming from retail, logistics and industrial and residential as well. ∫ SIMONA BAZAVAN Office drives up the real estate market Companies active in IT, outsourcing and telecom remained the main players driving up the local office market in 2014, both in Bucharest and on several expanding regional markets.

Lower costs than in Western and Central Europe, a versatile labor force and overall improving economic performances are factors that real estate pundits say will continue to fuel this trend throughout 2015.

Overall, some 195,000 sqm of office space was leased in Bucharest in the first three quarters of this year, with take-up representing 80 percent, according to data from DTZ Echinox.

Relocations within class A & B accounted for 47 percent of the total take-up – 73,000 sqm – while new demand made up 53 percent. Overall, new demand was up by 40 percent in the first nine months of 2014 y-o-y, according to the same source.

Eight new office buildings were delivered between Q1 and Q3, which increased Bucharest’s office stock by 4 percent to a total of 2.12 million sqm.

CBRE estimates that 71,000 sqm will be delivered in Q4 alone, including projects such as City Offices, HBC Dorobanti, AFI Business Park III, Green Court Bucharest, Ethos House and Bratianu OB. Another 166,000 sqm of office space is currently under construction and is estimated to be completed over the next two years, according to DTZ Echinox.

Office has also been the real estate segment that reported the largest number of transactions this year. In the last quarter, Globalworth Real Estate Investments alone bought two office projects located in northern Bucharest – the first building of Skanska’s Green Court Bucharest office project and the nearby Nusco Tower – for EUR 44 million and EUR 46 million respectively.

Only two shopping centers delivered this year A total of 62,000 sqm of modern shopping space was delivered this year in Romania, marking the lowest annual level since 2005, according to

Shopping spree: Globalworth Real Estate Investments bought two office projects in northern Bucharest for EUR 90 mln in Q4

JLL. This came in the form of two projects – the Vulcan Value Centre retail park in south-west Bucharest and Shopping City Targu Jiu – both developed by NEPI. However, several major projects, the largest of which are ParkLake and Mega Mall in Bucharest and Coresi Shopping Resort in Brasov, are presently under construction. Close to 270,000 sqm are scheduled to be delivered in 2015 and 2016, out of which over 160,000 sqm are located in Bucharest, according to JLL. The most important transaction on this segment this year involved NEPI which bought the 35,000 sqm Promenada mall in Bucharest from its developer Raiffeisen Evolution for EUR 148 million. Raiffeisen Evolution delivered the project in October 2013 following a EUR 130 million investment.

Demand for logistics and industrial space on the rise The manufacturing industry and retailers have been driving up demand for logistics and industrial space this year both in Bucharest and outside.

Given the pick-up in demand and the lack of new supply, developers are ex-

pected to invest more in such projects starting 2015.

Total leasing activity involving modern industrial and logistics space reached 89,000 sqm in the first semester of 2014, while take-up amounted to 61,000 sqm, according to DTZ Echinox data. Outside Bucharest the take-up was similar to a year ago, but in the capital this increased to 34,000 sqm, up from 20,000 sqm a year ago, according to the same source.

In the third quarter the gross takeup had increased to approximately 98,000, almost three and a half times up on to the same period of last year, according to JLL data. Close to 60 percent of this was net take-up, with the rest relocations, renegotiations and renewals. The increase was triggered by higher retailer sales and a good evolution of the agribusiness sector, according to the same source.

The most important transaction involving logistics space this year was closed by Austria’s CA Immo, which sold 215,000 sqm of warehouse space and 40 ha of land for development close to the A1 highway in Bucharest to Czech PointPark Properties (P3).

Residential resumes growth Developers have been talking about the residential market picking up since the beginning of the year. Data from the first three quarters confirms this, at least partially. Some 28,500 new housing units were delivered in the first nine months of this year, up by close to 2,000 units against the same period of the previous year, according to the National Institute of Statistics. Approximately 51 percent of the new dwellings are located in urban areas.

Some of the new residential projects announced this year include a EUR 37 million investment made by Lithuanian real estate developer Hanner into a three-block residential project near Tineretului Park in Bucharest and a EUR 14 million expansion of the Greenfield housing project in northern Bucharest. The high-end residential market has also seen increased interest from developers.

Despite such news, average house prices are expected to have fallen again in 2014, albeit minimally, and banks remain reluctant to finance residential projects. simona.bazavan@business-review.ro

www.business-review.eu Business Review | December, 2014

BUSINESS YEAR IN REVIEW 17

Retail slows down expansion A focus on smaller retail formats, online expansion and an overall slowdown in store openings were some of the main developments on the local FMCG retail market in 2014. Fashion and footwear retailers saw their expansion hindered by the lack of new shopping malls being opened while the DIY market underwent some drastic changes. ∫ SIMONA BAZAVAN Grocery retailers bet on small formats FMCG retail players opened a total of 70 new units in the first half of 2014, according to data from DTZ Echinox.

Kaufland was the only hypermarket operator who continued to invest in new store openings while the other players focused on smaller-sized formats. Mega Image was the absolute leader on this segment, having opened a total of some 58 Shop&Go proximity stores by early December.

While the retailer expanded mostly in Bucharest, other players targeted smaller local towns as well.

This year has also seen existing players investing in bringing new retail formats to Romania. In September, French Carrefour opened its first local Supeco store and a second one was inaugurated the following month.

The Supeco concept is a mix between a discounter and a cash&carry store and so far Carrefour has been present with this retail format only in Spain. Auchan, another major hypermarket operator, said in July that it was considering adding a new hypermarket format to its local presence. This would be a compact hypermarket selling fewer products than the regular Auchan hypermarket which would make it better suited to small towns. The concept has already been launched in Russia and China where it is proving very successful, according to company representatives.

By early December Carrefour was operating 167 stores in Romania, out of which only 27 were hypermarkets. In 2013 it became the first large FMCG retailer to launch an online store and the next year more retailers followed suit. After Cora launched a local drive-through service in 2013, this November it also made available a home delivery service for goods ordered from its online platform coradrive.com. In the first year of activity the retailer’s online sales amounted to over EUR 450,000. Earlier in 2014, online retailer eMag and supermarket operator Mega Image also announced that they had reached an agreement to launch an online store selling grocery products.

A crowded market The Vulcan Value Centre retail park

Retail detail: Players focused on opening smaller-sized formats in 2014

and Shopping City Targu Jiu – both developed by real estate investment fund New Europe Property Investments (NEPI) – were the only two modern shopping centers to be delivered this year in Romania. Retailers such as Carrefour, H&M, Takko and Deichmann are tenants in both projects.

The two projects’ combined surface of about 62,000 sqm marks the lowest annual level reported since 2005, according to JLL data.

While several big projects are presently under construction and approximately 270,000 sqm is expected to be delivered in the country in 2015 and 2016, retailers had a hard time finding space for additional stores in new locations this year. This meant many had to look at existing shopping centers.

As a result, the vacancy rate of prime shopping centers in Romania has been on a downward trend in Bucharest and other cities in the country, dropping to below 5 percent in the first half of the year, according to DTZ Echinox data.

Maxi Toys is one of the few new retailers to have entered the local market this year. Spanish sportswear retailer Decimas also announced it would open its first store in Romania in Coresi Shopping Resort Brasov next year.

Power shifts on the DIY market After a turbulent 2013, the local DIY retail market underwent more changes in 2014.

Local businessman Omer Susli officially took over the 27 local stores of insolvent Praktiker AG in February and by the end of December one more new location will be opened. German Praktiker had seen five consecutive years of falling sales in Romania but the new owner was confident that losses could be recovered by the end of 2014.

Praktiker was not the only international player to succumb to falling sales. Following poor results, OBI closed all seven of its local stores this September and some of the locations

were taken over by Greek toy retailer Jumbo. OBI, which is part of German retailer Tengelmann, opened its first local shop in 2008 and expanded until 2010.

While OBI did not manage to sell its entire network, Austrian DIY retailer bauMax announced in July that all of its 15 stores in Romania would be taken over by French DIY group Adeo which owns several DIY retail brands, and is already present locally with a Leroy Merlin store in Bucharest.

While international players struggled in 2014, local Dedeman, which is owned by Romanian businessmen Dragos and Adrian Paval, has consolidated its position as the leader of the Romanian DIY market. Unlike its international competitors, the company has managed to maintain a steady expansion rhythm over recent years, reaching a network of 39 outlets at the end of November. Three of the stores were opened this year. simona.bazavan@business-review.ro

www.business-review.eu Business Review | December, 2014

18 INTERVIEW

Orange Romania will keep the same level of investments next year Mobile operators’ access to fixed networks and the law regarding the registration of prepay card users will be two of the issues on the agenda of telecom players next year, Jean-Francois Fallacher, CEO of Orange Romania, tells BR. Some of the company’s plans for 2015 include 4G deployment and the introduction of VoLTE. that in urban areas as well.

If the environment in Romania remains the same as it has been lately, without major macro-economic issues, we will keep the same pace and the same level of investments.

∫ OTILIA HARAGA What is Orange’s position on access to fixed networks?

Indeed, we would be interested in access to a fixed broadband local loop for consumers. Why I am saying for consumers? Because for businesses we already have such offerings in the main Romanian cities.

When we bought the licenses in September 2012, we, the mobile operators, all had the obligation to provide national roaming to other operators. This has already happened as one of the fixed operators has signed a deal with one of us on national roaming.

Now, what we’re clearly asking from ANCOM is to regulate the fixed market as well. There is a player that has more than a 50 percent market share, which definitely makes that company a dominant player. That player is RCS&RDS. We are just asking for some balance in regulation so we can get access to a fixed broadband local loop. By the way, this would also be interesting to such an operator, because it could generate additional services and additional customers using its infrastructure; therefore it would be a win-win for both parties.

At the moment, discussions with the authorities are at the point where there is the intention to do it. We expect that behind the intention, they will really start to analyze this market.

Romania is the only major market in Europe that is not yet regulated on the wholesale side. I think only Malta is not regulated at the moment. Most of the large markets are. For instance, there is a very interesting regulation that started in Belgium, where the dominant cable operator was obliged by law to open up the TV signal to third parties.

Are there any other regulatory measures that will be important for the market?

As you know, there is a very important topic in Romania which still needs to be addressed: the prepay registration law.

At Orange, our position has been very clear from the start. We have always said that we will support this law, if the Romanian authorities are going to push operators to register all prepay customers. On the other hand, we hope we will be consulted on this because we need time to make it happen.

In Romania, there are about 12 million prepay cards (all operators together), so you can imagine that

registering 12 million customers will take time. I really hope the authorities will be diligent like they were in the past and agree to get us around the table and make such a law that will make it feasible for us to register these customers.

There was talk of registering customers using only digital and online means. We discussed for a long time avoiding having paper forms stamped and signed, which of course you can imagine is much more cumbersome if we must register millions of people.

This is a very important topic for the entire sector. The law was rejected at the end of the summer and with the presidential elections, I think that people’s minds were elsewhere, so I guess the discussions will restart at the beginning of next year.

I believe that we will need a year or two to register all the customers.

There are many countries that have already enforced this law, France being one of them.

What are Orange’s plans for next year?

4G and 4G + are of course our main priorities, but in the course of next year we will also go for VoLTE. There is no urgency, because as we speak there are very few smartphones supporting this new standard, but it is going to be an important move that we are going to do next year.

In parallel with 4G deployment, we will also be refreshing all the equipment in towns and cities. We have already done so in rural areas, and we are doing

When the telecom licenses were allocated, no new player entered the market.

Do you think this is still possible?

There was no new entrant, but there was a relaunch of RCS&RDS in April this year when it got the opportunity to use its new frequencies. So, in a way, we can say that there has been a new entrant.

In theory, I understand that there is still some spectrum that will become available on 4G but it is the role of the government and ANCOM to decide what to do with this additional spectrum.

What we have just observed is that a country like the US has only four operators, while in Europe, there are more than 140 operators. So, a common belief of the telecom sector is that there will be consolidation in many forms, whether they are partnerships or agreements.

Why is that? Well, you’ve seen what happened in the past. Take Romania for instance: the crisis put a lot of pressure on our margins; there was very tough competition which is still going on.

And let us not forget the decrease in termination rates. We’re still feeling the effect of this because if we compare ourselves versus last year, we were still enjoying termination rates of 3 cents/minute then, while now they are one cent less. So, if we compare ourselves to last year, we’ve had a drastic loss.

How do you think the convergent bundles will reshape the market?

If you look at the market and the way people are consuming, you will see that a lot of them are still buying mobile services from one place, fixed services from another and TV from another. So a lot of customers today still have two or three providers.

We believe this is one direction that the market could go in, but it will take a lot of time simply because Romania is a vast country with 19 million inhabitants.

We are not overestimating Romanians’ appetite for these completely combined services but we think it is definitely a future direction on the market.

How have Orange’s online sales fared?

We have two developments there. Our

online presence at www.orange.ro, as well as a mobile site which will enable customers to shop online from their smartphone or tablet. We are also enriching our existing Orange.ro site, so customers can find more information on the products. Right now, the online is quite important for high-value customers, but it is not yet a mass-market channel. However, we are sure it is going to become one.

What are your plans for multimedia content?

Our strategy is not going to change, because we want to be consistent.

On one side, we are providing DTH service with linear content. We are the only provider offering 40 HD channels. In September we closed a deal enabling us to distribute the Soccer First League here in Romania, which puts us ahead of the competition. The same month we passed the 110,000 TV subscriber mark. On the other side, we have an OTT (over-the-top) strategy. When you buy Orange TV you get access to Orange TV Go. We have had 800,000 downloads of this app on both Android and iOS. We have a place in this app where you can watch movies. We have a catalogue of more than 600 films and we are enriching it. Very recently we added Disney movies. We have also managed to close a deal with an American company called Hot from the US, which provides fresh series. Payment is per film.

When we launched we were told that this was not a service for the Romanian market but we believe it will catch up.

We have also partnered with Daily Motion, the European YouTube, with which we are building this platform. We do not plan to enter content production.

We want, however, to be the best aggregator of content.

Any new developments on NFC? We had a pilot-project in partnership with BRD and it showed that the service works. Now the challenge for us is to gather more partners around the table because the service needs to be used widely, which is not yet the case. I am sure that if I go to Carrefour Baneasa, which was equipped, and I try to pay with NFC on my phone, the cashier will ask me what NFC is. People also need to be trained in the supermarket. The snowball needs to be pushed. otilia.haraga@business-review.ro

www.business-review.eu Business Review | December, 2014

DEALS OF THE YEAR 19

Romanian M&A market recovers after economic crisis In the past two years, the Romanian M&A market has shown signs of recovery despite being still dominated by small to medium deals, with slightly increasing values. But the future sounds good for the sector, say specialists.

They expect the market to grow both in 2015 and 2016, while some sectors will face a significant consolidation. ∫ ANDA SEBESI In the past two years the Romanian M&A market has continued to grow slowly and significant deals like the exit of Enel and the sale of Lafarge’s operations are now on the horizon. But due to their complexity, specialists expects they will be completed next year. “In the beginning of 2014, most M&A professionals expressed cautious optimism about the market. As a firm, throughout the year we have witnessed the reactivation of major projects that had been stalling for various reasons. Looking back, I would say that the market is picking up speed. While we see some deals being closed, there are many more ongoing negotiations. And, much more importantly, several cross-border deals with a huge impact on both the regional and local markets,” says Nadia Badea, partner at Clifford Chance Badea. She adds that deals are being discussed more thoroughly, as investors are extremely cautious and place major focus on due diligence. Interest and expectations remain high, since record amounts of cash available in the market push investors to constantly look for business opportunities.

Specialists say that the Romanian M&A market is showing signs of recovery, due to a combination of factors including Romania’s general economic growth – even though the growth rhythm is still rather low – the regional economic context, as well as the right timing for consolidation in several sectors and industries. Plus, two large transactions – the sale of some of the Lafarge-Holcim assets in Romania, as part of the merger between the two large cement producers, as well as the sale of the Enel assets in Romania – are expected to stimulate the local M&A market. “These deals have attracted the interest of several major strategic and financial investors for Romania, which wanted large scale transactions that the Romanian market could not offer so far,” says Anda Rojanschi, partner at D&B David and Baias. As for the types of transactions, currently the Romanian market is still dominated by small to medium deals, with slightly increasing values. “However, we expect some major ones to be announced sometime in the first half of 2015. Therefore, I would expect the overall volume of the 2014 M&A market to remain close to the previous year, around the EUR 1 billion mark,” adds Badea.

Nadia Badea, partner at Clifford Chance Badea

Alexandru Medelean, M&A director at PwC Romania

Mihai Zoescu, director advisory at KPMG Romania

Anda Rojanschi, partner at D&B David and Baias

The stars are….

cently signed a binding agreement to acquire 100 percent of the shareholding of Volksbank Romania SA (VBRO) from Österreichische Volksbanken AG, Groupe BPCE, DZ Bank AG and WGZ Bank AG. This is in line with BT’s strategy to add value for its shareholders by making opportunistic acquisitions of Romanian banks or single loan portfolios.

BT and VBRO will operate as separate entities over the coming months, pending the successful closure of the transaction, which is still subject to a limited set of conditions including antitrust, merger clearance and Central Bank BNR approval. Upon the successful completion of the transaction, BT is planning to fully integrate the business of VBRO into BT’s existing structure.

“The acquisition of Volksbank Romania is part of our bank’s growth and consolidation strategy, reaffirming our commitment as an active market player and supporter of the Romanian economy. After the integration, considering

Energy, banking, retail, industry, logistics and agriculture were some of the most dynamic sectors in 2014 from the perspective of completed deals. “If we include the Electrica IPO we can say that the energy sector was the most active. Also we can see a realignment of the banking sector because of the acquisition of banks and of underperforming loan portfolios,” says Mihai Zoescu, director advisory at KPMG Romania.

“There are also other sectors where significant transactions have been completed, like retail, industry, logistics and agriculture. But it is difficult to say if there was a polarization in a specific field of activity.”

Alexandru Medelean, M&A director at PwC Romania, says that in 2014 the banking sector has been the star of the M&A market, with many large transactions being completed.

The most recent news in the banking system is that in mid-December Banca Transilvania announced that it had re-

the market shares of the two banks, BT aims to become the second largest bank in Romania. Banca Transilvania is well capitalized, enjoys high liquidity, an increasing market share and positive financial results,” stated Horia Ciorcila, chairman of the board of directors of Banca Transilvania.

OTP Bank – Millennium Bank, for which PwC was lead advisor for the seller Banco Comercial Portugues; the sale of RBS Romania’s corporate banking franchise to Unicredit, in which PwC also advised the seller; Nexte Bank – Banca Carpatica; Banca Transilvania – Volksbank and Unicredit – RBS were the main transactions of the year in the financial sector. “In addition to the transactions that involved banks, we have also witnessed deals with large portfolios of non-performing loans sold by Volksbank (EUR 500 million worth of NLP) and BCR (EUR 350 million). PwC was advisor for both these transactions,” says Medelean. “For 2015 we expect to see further consolidation on the Romanian banking sector, as well as further opportunities for local banks to deleverage by selling non-core assets, including non-performing loans,” predicts Jonathan Wheatley, director, deals, PwC Romania.

Another active sector in 2014 was agriculture. The acquisition by Transavia of the business of Food 2000, an insolvent company for which PwC was advisor for the buyer, is one such example. “Agriculture and the food industry are sectors that were generally active in terms of M&A activity in recent years and we expect that this trend will continue, as most of the markets in this sector are still widely fragmented,” says Rojanschi.

In addition to the consolidation trend in the financial sector, there was a boost of strategic investments in real estate. Other fields like technology, media and telecommunications remained a focus, in view of their huge potential in today's economy. “Our current pipeline also includes deals in the oil & gas industry, the financial sector, consumer business, pharmacy and healthcare,” says Badea of Clifford Chance Badea.

Rojanschi of D&B David and Baias emphasizes a trend on the real estate market where some major players such as investment fund NEPI are currently consolidating their portfolios of properties, mostly in Bucharest, but also in some other large cities like Timisoara and Cluj, leading to an increase in real-

20 DEALS OF THE YEAR estate deals.

Elsewhere, Rojanschi expects sectors like IT&Telecom, media, energy and healthcare to lead the way in terms of M&A activity in 2015. “There is talk in the market about a possible consolidation of the private healthcare sector.

Also, the IT services market is going through re-arranging, which could lead to more transactions in this field,” says Rojanschi. “Although we don’t expect the value of the deals to increase in all sectors, we believe that the number of M&A deals will increase next year.”

… and the future looks bright Zoescu of KPMG says that there is room for moderate optimism about the evolution of the local M&A market. “A significant factor in boosting the M&A market is the increased trust of foreign investors in the evolution of the Romanian economy,” says the KPMG representative. “We expect intensified

activity over the following months, with some major deals and cross-border transactions reaching a successful end.

Regained confidence in the strength and stability of the local economy could prove a major boost for the M&A activity in Romania. Taxation, in terms of predictability, could also be a driver,” says Badea of Clifford Chance Badea.

But the global context also matters, as the entire business community is facing major question marks: the European economy and its perspectives, the uncertainty and implications of sanctions imposed on Russia, the related geopolitical context, shifting trade and capital flows in the global economy, the technological revolution, and intensified scrutiny and intervention from national regulators.

Rojanschi expects the M&A market to increase in Romania in 2015 and 2016, taking into consideration the country’s favorable position in the regional con-

In 2014, PwC Romania was involved in the following deals in the banking sector: l Millenium Bank Romania – OTP Bank. Banco Comercial Portugues sold its Romanian branch – Millenium Bank Romania to OTP Bank. PwC PwC was lead advisor for the seller. l RBS – Unicredit. RBS Romania sold to Unicredit its Romanian corporate banking franchise. PwC was lead advisor for the seller. l Volksbank Romania – consortium of private equity investors. Volksbank Romania sold a portfolio of 500 million Euro worth of non-performing loans to a consortium of private equity investors. PwC was lead advisor for the seller. l BCR – consortium of private equity investors. BCR sold a portfolio of 350 million Euro worth of non-performing loans to a consortium of private equity investors. PwC was lead advisor for the seller.

www.business-review.eu Business Review | December, 2014 text, as opposed to the political and eco- the years prior to the global financial crinomic situation in countries like sis. Investors' interest was high and Ukraine, Hungary and Bulgaria. “This some deals reached impressive values. growing M&A activity in Romania was In a seller’s market, the negotiations already seen in 2014, when the overall process mostly focused on price.

M&A value in Romania was the third “Today it's a buyer’s market: we’re seeing largest in CEE, after those of Poland and fewer and smaller deals, often closed after a lengthy negotiation process. Inthe Czech Republic,” she says.

The Romanian M&A market is recov- vestors are no longer willing to pay the ering after the economic downturn, EBITDA multiples they use to pay in the agree pundits. “We think that the levels boom period. They are much more cauregistered prior to the crisis can be tious, more demanding and inquisitive, reached and exceeded on the medium and make strategic decisions when determ but it is difficult to estimate a pe- ciding on a deal,” concludes Badea. riod of time,” adds Zoescu. Without doubt, the market was more dynamic in anda.sebesi@business-review.ro

In 2014, D&B David and Baias was involved in the following deals: l Antenna Group BV (buyer) - Kiss FM Music SRL/P7S1 Radio Holding SRL (targets) - D&B assisted Antenna Group with the acquisition of part of the Romanian television and all radio channels owned by ProSieben group.

The company assisted the client with a legal due diligence on the target companies and transaction support services. l Altex Romania (seller) - two commercial centers owned by Altex Romania SRL: one in Alba Iulia Retail Park and the second in Aurora Shopping Mall) - Nepi Ten Development Solutions SRL (buyer) - D&B assisted the Altex Romania with the sale of two commercial centers located in Alba Iulia and Buzau counties. The value of the transaction was EUR 10 million. l Mega Image/Delhaize Group (buyer) - 20 stores owned by Angst Retail SRL - D&B assisted Mega Image with the acquisition of 20 stores from Angst network l BPI A/S (buyer) - ten Romanian companies from Macromex Group (targets) - D&B provided buy-side legal assistance to the Danish company BPI A/S, a large meat trader, during the acquisition of ten Romanian companies. l Riofisa Internacional SL (seller) - Credanti Holdings LTD (buyer) - D&B assisted Riofisa in selling its participaion in two real estate projects in Romania to Tiriac group.

www.business-review.eu Business Review | December, 2014

DEALS OF THE YEAR 21

ADVERTORIAL

Romanian M&A market sees increased activity in 2014, still lagging behind other countries in the region on private equity tion will continue to be a priority for many companies in 2015.

Horea Popescu, the head of M&A at CMS Romania, talks about the past year and what the future holds for M&A in Romania What can you tell us about the cross-border transactions that took place in 2014?

We have seen an uptick in deal volume on the Romanian M&A market in general and a great deal of this is of a cross-border nature, as foreign companies expand their business activity in Romania or make their first acquisitions here – and of course then there are the international players who are restructuring their global portfolios and divesting in some or all of their assets or business lines in Romania. We continue to see an increase in strategic investment from foreign investors too. There has been a recent wave of foreign investors interested in the agricultural sector in Romania and this will certainly continue in 2015.

There is significant growth potential for Romanian agri-business and heavy investment is needed in this area. Projects are encouraged by both EU and Romanian government subsidies available to support investments in the sector.

We have seen increased interest from Chinese companies in particular and this looks set to continue for the coming year(s). The fact that the Chinese government has opened a $10bn special credit line for joint investment projects in East European infrastructure and technology projects is further testament to China’s serious interest in promoting economic cooperation with the region.

How has the Romanian M&A market looked in the last year?

Which were the most active sectors?

The last year has seen an increase in M&A activity on the Romanian market, driven largely by deals in the Financial Institutions and Services, Technology and Communications, Energy, Manufacturing, and Agriculture sectors. In particular the financial sector has seen high levels of transaction activity in the last year, with some major deals in the banking (including both sales of banks and the transfer of loan portfolios), insurance and leasing sub-sectors.

There has been a shift in activity in the energy sector. The meas-

ures implemented by the Romanian Government in recent years which have changed (and effectively cancelled) a regime intended to attract investment in the renewable energy sector, have negatively impacted the investments of numerous investors in renewable energy in Romania. However, transaction activity continues, mainly in oil & gas exploration and non-renewable electricity projects. 2014 also saw the first listing of a number of Romania-based renewable energy projects on the Canadian stock exchange market. We have seen a number of large-scale transactions – often part of major global asset sales – in the manufacturing sector, with large industrial groups selling their Romanian production facilities. We envisage this trend continuing into next year, with several large industrial asset sales in the pipeline. There has also been a slight uptick of deal activity in the real estate sector.

What are the main trends you have seen in the last year?

Generally speaking, we are seeing a larger volume of smaller value transactions on the market. That being said, “big ticket” deals are currently being considered by some serious investors, who are carefully planning ahead for the coming year(s). The deal landscape in Romania was driven less than was expected by privatisation in 2014. Levels of private equity investment remained low due to the lack of debt financing – although we have seen a slight increase in activity compared with last year. Once again the deal landscape in 2014 was shaped to a large extent by restructuring deals, as businesses adapted to new economic pressures and focused on driving revenues. Restructuring and reorganisa-

How do you think the local M&A market will evolve in the years to come?

We believe that 2015 will again bring a steady flow of deals and are optimistic about continued growth in the M&A market – and have already seen it picking up some considerable momentum in 2014, with some “big ticket” deals in the pipeline, such as the widely reported potential divestment of Enel here. Broadly speaking, significant improvements to transport infrastructure in Romania in the coming year(s), alongside the more efficient absorption of EU funds, should prove to encourage investment into Romania and move the market forward. The most attractive sectors for acquisitions in 2015 will likely be Energy and Natural Resources, Technology and Communications, Infrastructure and Agriculture, all attracting strategic investment. In particular the Technology and Communications sector shows a great deal of potential.

What can Romania learn from the experience of other countries?

It seems that macroeconomic pieces have fallen into place, encouraging European M&A. Anticipation of strong domestic demand and export growth will likely anchor recovery in key economies such as Germany and the UK. As global confidence in Europe’s recovery increases, Romania has the potential to become an attractive investment destination for global M&A. To maximise this potential, it is imperative for Romania to have effective and transparent legal systems in place.

How do you see the future of private equity in Romania?

While Romania is still in a moderate growth phase compared to other parts of Europe, it has the potential to become again an interesting market for private equity investors in the medium/long term. While there are opportunities across the board, the high opportunity sectors in Romania will likely be agriculture, technology, energy and financial services. In terms of the most competitive deal size, it seems that the “sweet spots” for investors, whether new or seasoned, are between EUR10-30 million and EUR3050 million, depending on the fund, although there are larger deals (EUR50 million +) out there which may be also be of interest. We see potential for significant increased growth in the years ahead and believe that Romania could become an attractive deal location in

the not so distant future.

Is there a gap between the Romanian private equity market and that in other countries?

Yes – Romania is lagging behind compared with other countries in the region where private equity funds tend to be based. i.e. in CEE’s more mature markets, such as Poland and the Czech Republic. Funds are still hesitant about coming back to Romania in full force after the economic crisis of recent years, hence the slight disconnect in activity levels between Romania and central CEE countries. CEE as a whole remains attractive given the diversification benefits in these countries. Funds are attracted by the competitive advantage that can be gained by having their portfolio companies sell products and services into Western Europe, while utilising the lower cost base that exists in certain CEE jurisdictions, including Romania.

You have recently published the 2014 CMS European M&A Study. What were its main conclusions?

Notable findings from the latest study are the decline in the use of purchase price adjustments; earn-out periods are becoming longer; buyers are generally requiring less security for warranty claims than they did in 2012; and warranty periods are generally becoming shorter. These key conclusions may vary in the individual M&A markets, despite the general European trend. In the CEE region, we saw: locked box usage increased, compared to last 5 years; earn-out usage decreased compared to 2012; deals in CEE most likely in Europe to have MAC clause (28%); usage of escrow accounts decreased in CEE, compared to last 5 years; de minimis and basket clauses widely used in CEE; requirement of cartel clearance as a closing condition increased; reduction of deals conditional on buyer finance; and arbitration continues to be the preferred dispute resolution forum.

www.business-review.eu Business Review | December, 2014

22 DEALS OF THE YEAR

AGRICULTURE CHEMICAL Agri.Capital Luxembourg S.a.r.l. INDUSTRY buys 100 percent of shares in two Romanian cereal producers Value of transaction: N/A Legal team buyer: Wolf Theiss Legal team seller: Carsten Lau Kjærgard (individual Danish lawyer) Description: Agri.Capital Luxembourg S.a.r.l. acquired 100 percent of the shares in two Romanian companies performing mainly production of cereals by way of working leased land in Timis county.

Wolf Theiss has also assisted the client in a due diligence process that involved the selection of the main areas of interest and of criteria for random review of certain categories of documents. Additionally, its assistance was required in a financing project that consisted in the financing granted by the buyer to the seller for initiating the internal cleaning process prior to completion.

COFCO acquires Nidera Value of transaction: USD 2 billion Legal team COFCO: Clifford Chance Description: COFCO, a Fortune 500 company and the largest grain, oil and foodstuff company in China, acquired a 51 percent stake in Nidera, a global commodity trader and agribusiness company that has international operations in 18 major export and import countries and distributes its products to more than 60 countries in the world. The transaction was completed in March 2014.

AUTOMOTIVE Hendrickson buys subsidiaries of Frauenthal Group Value of transaction: EUR 25 million Legal team buyer: Wolf Theiss Legal team seller: N/A Description: Hendrickson acquired the subsidiaries of Frauenthal Group. The US automotive supplier Hendrickson has been interested in certain subsidaries of the Austrian Frauenthal Group, a stocklisted conglomerate headquartered in Vienna, for some time already. The targets of the acquisition were Frauenthal subsidaries from the automotive components suppliers sector in Judenburg (Austria), Chatenois and Douai (both in France) and Sibiu (Romania).

The components produced by these members of the Frauenthal Automotive Group are delivered to numerous leaders in the European utility vehicle industry.

Automobile Craiova privatized Value of transaction: N/A Legal team buyer: NNDKP Legal team seller: Tuca Zbarcea & Asociatii.

Description: In July this year, the Romanian Privatisation Agency (AAAS) announced in a press release that it has signed the final documents relating to the privatisation agreement for the former Automobile Craiova with its current owner, Ford Romania.

Dynea Chemicals Oy/Dynea International Oy sells Dynea Resins Romania to capiton AG. Value of transaction: N/A Legal team buyer: Zamfirescu Racoti&Partners Attorneys at Law (on Romanian law matters) and BMH Brautigam &Partner Legal team seller: Millington Advisory Parners Description: Acquiring the shares issued

by Dynea PRC Group (including PRC UK Ltd.) and its subsidiaries, including the shares of Dynea Resins Romania SRL. The German investment fund took over Dynea Resins Romania SRL, a private company specialized in the production of adhesives, in the project contemplating the takeover of the European division of a global leader in the chemical industry.

The transaction included a complex system of legal operations: cross border shares acquisition; granting corporate guarantees; restructuring the package of loan facilities.

CONSTRUCTION MATERIALS Advent International sells Ceramica SA to ADM Capital Value of transaction: N/A Legal team buyer: CMS Legal team seller: Allen&Overy LLP Description: International investment group with a particular focus on emerging markets, in particular CEE, ADM Capital’s purchase of a 100 percent stake in EuroBrick International B.V. from Advent International, one of the largest global private equity firms. Dutch entity EuroBrick International B.V. is the largest shareholder in Bucharest-listed Ceramica S.A, one of Romania’s leading ceramic and clay brick producers. Ceramica has consolidated its market position and is now a key player in the construction materials market in Romania having increased its market share from 6 per cent in 2008 to 20 per cent in 2014 and expanding in to neighbouring markets in Ukraine and Moldova.

CONSUMER GOODS Merger of global coffee business of Mondelez International Inc. and D.E. Master Blenders 1753 B.V. Value of transaction: USD 5 billion Legal team Mondelez: Clifford Chance Description: Mondelez International and D.E Master Blenders 1753 B.V. combine their respective coffee businesses to create Jacobs Douwe Egberts coffee com-

pany. The two companies own some of the world's leading coffee brands, such as Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicano from Mondelez International and Douwe Egberts, L'OR, Pilao and Senseo from D.E Master Blenders 1753. The deal was completed in May 2014.

Innova Capital buys Blue Coffee Service Value of transaction: N/A Legal team buyer: Popovici Nitu & Asociatii Legal team seller: Eversheds Lina&Guia Description: La Fantana, a player specialized in bottled water using the watercooler system entered this year on the coffee automakers local market, targeting companies and the HoReCa segment. This was possible through the acquisition of the local distributor of Lavazza products, Blue Coffee Service, from Aqula group. Innova Capital owns 75.5 percent of La Fantana.

Throughout this acquisition, La Fantana takes over 9,500 coffee automakers, in addition to its 110,000 watercoolers.

The acquisition is part of the general strategy of La Fantana that aims to consolidate its presence on the market based on an extended portfolio of products and services.

DELIVERY Abris Capital Partner and Cargus acquires Urgent Curier Value of transaction: N/A Legal team buyer: Clifford Chance Badea.

Legal team seller: N/A. Description: Abris Capital Partners and its portfolio company Cargus acquired Urgent Curier, one of the top three internal courier companies.

Urgent Curier will further merge with courier company Cargus resulting in a business with a fleet of over 1,800 vehicles, 1,800 couriers and a logistics network of over 142 deposits.

The deal was completed in June 2014.

ENERGY Sun Value Gmbh acquires 100 percent of two project companies Value of transaction: N/A Legal team buyer: Wolf Theiss Legal team seller: N/A Description: Sun Value Gmbh (a player in the energy/photovoltaic industry) was involved in a share purchase agreement whereby two project companies were 100 percent acquired by it. The transaction was challenging due to the multitude of regulatory matters to be handled prior to completion, including the split of a real estate asset. Moreover, the financials of the transaction raised some challenges such

as highly transaction-specific price adjustment mechanism and escrow agreement.

Sterling Resources Ltd sells its interest in Block 15 Midia Value of transaction: Between USD 29,500,000 – USD 78,500,000 Other firms advising on the matter and their role: Burness Paull & Williamsons LLP – legal advice for Sterling in UK; NNDKP – for ExxonMobil Exploration and Producation Romania şi OMV Petrom SA Legal team seller: Musat & Asociatii Description: Sterling Resources Ltd, a world-wide company engaged in the exploration, development and production of crude oil and natural gas in selected areas of the world, signed a sale-purchase agreement with ExxonMobil Exploration, Production Romania Limited and OMV Petrom SA for the sale of its 65 percent interest in the deep water area of Block 15 Midia in the Romanian Black Sea.

Socar acquires remaining stake in Socar Petroleum SA. Value of transaction: N/A Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: Jinga Maravela & Asociatii Description: Azerbaijani national oil and gas company SOCAR acquired the remaining 10 percent stake it did not already control in its Romanian division Socar Petroleum SA for an undisclosed amount, Agerpres reported. SOCAR announced it will also contribute to EUR 35 million to Socar Petroleum's capital increase following the completion of the transaction.

China Nuclear Power Corporation to invest EUR 6.45 billion in Cernavoda Power Plant Value of transaction: EUR 6.45 billion (according to a feasibility study done

by EY that showed the needed investment) Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: a consortium of law firms Description: China Nuclear Power Corporation placed this year, on September 23, a binding bid for the construction of two reactors (Units 1 and 2) at the Romanian nuclear power plant in Cernavoda, deputy Prime Minister Liviu Dragnea stated.

Early September, nuclear power producer Nuclearelectrica (SNN.RO) had announced that China Nuclear Power Corporation qualified in the process of investor section for the construction of the two reactors.

Electrica IPO Value of transaction: EUR 444 million Legal team issuer: Allen&Overy Legal team underwriters: Paul Hasting LLP, Musat&Asociatii Legal team, GDR depositary: Clifford Chance Badea

www.business-review.eu Business Review | December, 2014 Description: Romanian power supplier and distributor Electrica listed shares and global depositary receipts on the London and Stock Exchanges. The underwriting syndicate selected by Electrica was formed by Raiffeisen Bank, Citigroup, BRD Societe Generale and Swiss Capital. The IPO was completed in June 2014.

Fondul Proprietatea sells 5 percent stake in Romgaz Value of transaction: EUR 147 million Legal team buyer: N/A Legal team seller: Clifford Chance Badea Description: Fondul Proprietatea sold a 5 percent stake in state controlled gas producer Romgaz via private placement. The deal was completed in June 2014.

Canaccord IPO Value of transaction: N/A Legal team (Canaccord): CMS Legal team (investor): BPV Grigorescu Description: Canaccord’s listing of a number of Romania-based renewable energy projects on the Canadian stock exchange market was reported as the first IPO of a Romanian energy project on the Toronto Stock Exchange.

MOL Group acquires Eni’s downstream business Value of transaction: N/A Legal team buyer: CMS Legal team seller: Allen&Overy LLP Description: In May, MOL Group announced the sale-purchase agreement with Eni for its downstream businesses in the Czech Republic, Slovakia and Romania, including retail network (currently under Agip brand). In Romania, the acquisition is a major step for MOL Group in achieving its strategic plan to increase its market share. As a result of integrating the 42 acquired service stations, MOL Romania will reach a network of 189 units, placed in high traffic and premium locations, thus the Group will realize its growth targets in the Romanian fuel retail market and will further increase its network coverage.

FINANCE Gothaer Finanzholding AG and affiliated entity acquire entire share capital of Gothaer Asigurari-Reasigurari SA from Constantin Toma and Efraim Naimer Value of transaction: N/A Legal team buyer: Wolf Theiss Legal team seller: Voicu Filipescu, in association with Squire, Sanders and Dempsey LLP – Partners Mugur Filipescu and Georgiana Badescu– legal advisor of the sellers Description: The acquisition of the remaining shareholding in Gothaer Asigurari-Reasigurari SA (former Platinum Asigurari-Reasigurari SA) from the company's founder Constantin Toma and his partner Efraim Naimer,

DEALS OF THE YEAR 23 who both exit the Romanian company.

As a result of this transaction, Gothaer Finanzholding AG and an affiliated entity acquired the entire share capital of Gothaer Asigurari-Reasigurari SA.

Getin Holding buys VB Leasing Romania IFN Value of transaction: USD 16.7 million Legal team buyer: Tuca Zbarcea & Asociatii and Domanski Zakrzewski Palinka sp.k Legal team seller: Schonherr Rechtsanwalte Gmbh Description: Polish financial group Getin Holding signed an agreement with Austrian firm VB-Leasing International Holding GmbH to acquire Romanian leasing company VB Leasing Romania IFN for PLN 52 million (USD 16.7 million), Mediafax reported according to a press release made public by Getin Holding.

Acquisition of a large non-performing loans portfolio originated by Volksbank Romania Value of transaction: EUR 495 million Legal team buyer: Tuca Zbarcea & Asociatii and Clifford Chance Badea – Deutsche Bank Legal team seller: Schoenherr Description: On July 28, 2014, Bayside Capital, a credit affiliate of H.I.G. Capital, together with AnaCap Financial Partners and Deutsche Bank, announced the purchase through Romanian-registered companies of a portfolio of EUR 495 million of non-performing and sub-performing loans from Volksbank Romania.

The portfolio comprising of over 3,500 loans is backed by a mix of primarily residential and commercial real estate.

The transaction was completed in July 2014.

TeamNet International project Value of transaction: EUR 15 million of debt and EUR 10 million of equity Legal team buyer: Hogan Lovells and Bulboaca & Asociatii Legal team seller: Tuca Zbarcea & Asociatii Description: TeamNet International entered into a complex transaction - a combination of equity and debt - by which the International Finance Corporation (IFC) and the Black Sea Trade and Development Bank subscribed shares in total value of EUR 10 million and provided a loan up to EUR 15 million.

UniCredit Tiriac Bank takes over corporate business of RBS Romania Value of transaction: The agreement refers to a total portfolio of aggregate assets of around EUR 260 million and corporate deposits of around EUR 315 million.

Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: RTPR Allen&Overy Description: In August this year UniCredit Tiriac Bank and RBS Romania announced that they have agreed the trans-

fer of the corporate business of RBS Romania to UniCredit Tiriac Bank. The agreement refers to a total portfolio of aggregate assets of around EUR 260 million and corporate deposits of around EUR 315 million.

The deal follows the acquisition performed by UniCredit Tiriac Bank last year, comprising the Retail and Royal Preferred Banking business of RBS Romania.

OTP Bank buys Millennnium Bank Romania Value of transaction: EUR 39 million (including shares and costs of integration) Legal team buyer: CMS Legal team seller: RTPR Allen&Overy Description: The contract specifies that OTP will receive 100 percent of Millennium Bank Romania shares and the bank itself will be integrated in the OTP Bank Romania structure after legal formalities and approvals are obtained, writes Mediafax. Discussions between OTP and Millennium began in October last year and in order to successfully conclude the deal, the Romanian National Bank, the Portuguese National Bank, The European Commission and the Competition Council all had to sign off, according to Laszlo Diosi, CEO for OTP Bank Romania.

MKB Bank sells Nextebank SA Value of transaction: N/A Legal team buyer: NNDKP Legal team seller: CMS Description: MKB Bank sold its 96.3 percent stake in Nextebank S.A. The acquisition was made by a Dutch SPV of Axxess Capital's private equity fund, Emerging Europe Accession Fund, whose main investors include EBRD, EIF, DEG and BSTDB.

MKB Bank sells its local leasing subsidiary to Trendo Automotive SRL Value of transaction: N/A Legal team buyer: N/A Legal team seller: CMS Description: The transaction involved the MKB Bank’s divestment of its Romanian leasing subsidiary. The sale was made to Trendo Automotive SRL, a large Romanian leasing business and a member of the International Leasing Group.

FOOD HEALTHCARE Montagu Private Equity LLP sells Euromedic International Value of transaction: N/A Legal team: Clifford Chance Description: Montagu Private Equity LLP one of Europe’s longest established private equity firms, sold its holding in Euromedic International, the largest pan-European medical services provider, to Ares Life Sciences, the majority owner of Euromedic. Euromedic operates 144 Diagnostic and Cancer Treatment Centers in 14 countries across Europe (key countries include Poland, Hungary, Czech Republic, Romania, Turkey, Switzerland and Italy).

The transaction was completed in October 2014.

INDUSTRY Saffron Holding A/S sells shares held in Flexfoil SRL Value of transaction: EUR 1,725,000 Legal team buyer: N/A Legal team seller: Wolf Theiss Description: Saffron Holding A/S sold its shares held in Flexfoil SRL. More particularly, Wolf Theiss has assisted Saffron Holding A/S in relation to the negotiation, signing and closing of the share-purchase agreement, including in relation to the fulfilment of the conditions precedent to the transaction.

IT Oresa Ventures buys Romanian Business Consult Value of transaction: N/A Legal team buyer: Popovici Nitu & Asociatii Legal team seller: Kinstellar Description: Swedish venture capital Oresa Ventures tookover a minority package in IT solutions supplier for retail sector, Romanian Business Consult (RBC). The acquisition represents the entrance of Oresa Ventures on the IT segment.

Aegon buys Eureko’s life insurance and private pension business

MEDIA

Value of transaction: N/A Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: CMS Description: At the beginning of this year Aegon tookover Eureko’s life insurance and private pension business lines. As a result of the transaction Aegon became the third largest private pension supplier in Romania, having about 650.000 members while its life insurance portfolio places it among the first ten largest ones on the market.

ProSiebenSat.1 sells Prima TV to Cristian Burci Value of transaction: N/A Legal team buyer: Drinceanu & Asociatii Legal team seller: Popovici Nitu & Asociatii. Other law firms advising the seller: ProSiebenSat.1: Milbank, Tweed, Hadley & McCloy LLP and Schoenherr Description: German media group ProSiebenSat.1 sold Kiss TV and Kiss FM, Magic FM, One FM and Rock FM radio stations to Antenna Group from Greece while Prima TV was sold to the

www.business-review.eu Business Review | December, 2014

24 DEALS OF THE YEAR

and the acquisition of the entire group by the French group Adeo, the owner of the Leroy Merlin retail chain. The latter will take over the 15 stores which were operated by bauMax in Romania, including the ones owned by Immorom Sigma SA. The acquisition meant the restructuring of the whole bauMax group in Romania, involving a number of ten credit institutions, among which five banks and five leasing companies and non-banking financial institutions. The transaction is regarded as the most complex reorganization process ever to be undertaken by bauMax and will focus on five markets in CEE.

OTHER INDUSTRIES ASO Siderurgica takes over Cromsteel Industries

Experts say the local M&A market is showing signs of recovery but it is dominated by small to medium deals

businessman Cristian Burci. Once with the acquisition of the five local radio stations Antenna Group entered on the Romanian media market.

REAL ESTATE Carrefour Romania owns and operates ParkLake hypermarket Value of transaction: EUR 180 million investments Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: N/A Description: In September this year Carrefour Romania announced it has reached an agreement with Sonae Sierra to own and operate a hypermarket in ParkLake, a commercial center developed by Sonae Sierra and Caelum Development in Bucharest. Further to this agreement, Carrefour will own and operate a 12,000 sqm hypermarket following investments worth EUR 180 million.

Policolor sells its property on Theodor Pallady to real estate developer Value of transaction: N/A Legal team buyer: N/A Legal team seller: N/A Description: On September this year Policolor announced it has agreed to sell its property on Theodor Pallady to a real estate developer.

According to Marius Vacaroiu, CEO – Policolor – Orgachim, “the funds obtained from the transaction will be directed towards developing a new platform, a project which Policolor is about to start. The platform will include new factories, for which the company is waiting on permits“.

Accession Fund sells Charles de Gaulle Plaza Value of transaction: N/A Legal team buyer: N/A Legal team seller: Clifford Chance Badea Description: Accession Fund/ GLL Real Estate Partners transferred Charles de Gaulle Plaza, a 40,000 sq.m office center in Bucharest to another fund managed

by GLL. The deal was completed in January 2014.

Accession Fund to sell Casa Stega Value of transaction: N/A Legal team buyer: N/A Legal team seller: Clifford Chance Badea Description: Accession Fund/ GLL Real Estate Partners sold Casa Stega, a class A office building in Bucharest.

The deal was completed in July 2014.

O1 Group Limited to acquire 16 percent of Austrian CA Immo Value of transaction: EUR 295 million Legal team buyer: Clifford Chance Legal team seller: Freshfields Description: O1 Group Limited acquired a 16 percent stake in Austrian CA Immo from UniCredit. The 15,954,891 ordinary shares bought by O1 Group represent the entire participation held by UniCredit in CA Immo and correspond to approximately 16.35 percent of the outstanding share capital and voting rights of CA Immo. The deal was completed in October 2014.

Tuilia Invest SA buys C&I Building SRL Value of transaction: N/A Legal team buyer: Popovici Nitu & Asociatii Legal team seller: N/A Description: Tuilia Invest SA purchased the entire share package in C&I Building

SRL (the vehicle developing the office building Unirii View Tower) owned by Casuneanu family. The premises where Unirii View project will be developed is located near the OMV gas station from Corneliu Coposu Avenue and it was owned in total by Casuneanu family till 2008 when they assigned it to Yves Weerts.

Romenergo Group sells 1.2 hectares to NEPI Value of transaction: EUR 10-20 million (ZF and public estimations) Legal team buyer: N/A Legal team seller: Popovici Nitu & Asociatii Description: Romenergo Group, a company controlled by the businessman Dragos Bilteanu sold 1.2 hectares to SouthAfrican fund NEPI. The acquisition will contribute to the extension of the Promenada mall that was recently bought by NEPI for EUR 148 million.

RETAIL bauMax group restructured Value of transaction: EUR 17 million Legal team buyer: Noerr Legal team seller: Wolf Theiss Description: The sale of all shares of Immorom Sigma SA (previously Immoconsult Leasing Romania IFN SA) by the company's shareholders VB Real Estate Services GmbH, VB Real Estate Leasing Alpha GmbH, VB Real Estate Leasing Beta GmbH, VB Real Estate Leasing Delta GmbH and VB Real Estate Leasing Gamma GmbH towards PVN Romania SRL and Inprox Bucuresti SRL, both buyers being part of bauMax Group.The transaction was closed in the context of the bauMax group exit from the local market

Value of transaction: EUR 25 million Legal team: Musat & Asociatii (approached by Banca Nazionale Del Lavoro and UniCredit for a compound transaction).Other firms advising on the matter and their role: Schoenherr – legal advice for Cromsteel Industries; Studio Mendolia – for ASO Siderurgica Description: takeover of Cromsteel Industries (one of the most important local players in the steel industry) by ASO Siderurgica, an Italian company specialized in the production of special large steel ingots and forged bars, mainly for use in the oil & gas, petrochemicals, power generation, aerospace, mechanical and maritime industries.

Platinum Equity LLC buys 70 percent of TerraTest Group Value of transaction: N/A Legal team: Musat & Asociatii. Other firms advising on the matter and their role: Baker & McKenzie – legal advice for Platinum Equity LLC; Allen & Overy Romania– for Platinum Equity LLC; Gómez-Acebo & Pombo Abogados – for Platinum Equity Description: Platinum Equity LLC was involved in a transaction resulting in the acquisition of 70 percent interest in the holding company of Terratest Group (a major Spanish company specialized in the geo-technical field, excavation, drilling and soil treatment systems), including the Romanian subsidiary of the company.

Omya Calcita SRL acquires calcite quarry from Gabbro Minerale SRL Value of transaction: N/A Legal team: Musat & Asociatii. Other firms advising on the matter and their role: N/A Description: Omya Calcita was involved in a transaction in connection with the acquisition of the calcite quarry held by Gabbro Minerale S.R.L. in Hunedoara County, which included the transfer of both the exploitation license and the real estate assets pertaining to the quarry.

www.business-review.eu Business Review | December, 2014

26 EXCELLENCE IN BUSINESS

20 YEARS OF EX 20 years of excellence quality on the Romanian hotels market Markus Koller, the general manager at Hotel Pullman tells Business Review about the hotel’s most important achievements in its 20 years of presence on the local market and emphasizes the main ingredients of the success recipe behind Pullman Bucharest. point which also offers a lot to discover.

You have been present on the Romanian market for over 20 years. What did it mean for your business so far?

Accor was the first international hotel chain to enter Romania after the revolution in 1989 and it was the initial spark needed to raise the interests of others to follow us. From this point of view we have contributed a lot to the development of the international tourism structures and standards which are now established not only in Bucharest but also transferred into the rest of the country.

How did the local hotel market evolve in the 20 years you have been here?

It grew naturally and followed all the developments and technological revolutions which disrupted the tourism industry in this time. Romania and

Photo: Mihai Constantineanu

What are your company's most important achievements in the 20 years on the local market?

It’s always amazing for me to see how many colleagues who are working now in various positions for other hotels have started their career in the tourism industry in our hotel. Last month we hosted the regular meeting of the Skal Club (association of professionals working in the tourism industry), which by the way was founded 15 years ago by the General Manager working at our hotel at that time, and realized that you have today at least 5 General Managers in different hotels in Bucharest who worked for our company in the past (including me by the way). Most of them are women and all of them talk highly about their time and experiences they have made when working at our hotel. So we can proudly say that we have contributed a lot to the education of tourism professionals in this country and at the same time promoted diversity.

Bucharest have an immense potential for touristic development and this makes me look back on the past 20 years with pride, but also look ahead with a lot of optimism. Everyone who gets to know Romania is amazed by the huge touristic potential of the country which so far has only been touched marginally. I’m not talking mass tourism here, however with the Danube Delta, the Maramures monasteries, the Transfagarasan and Transalpina roads and so many other unique sites in this country, you have all the ingredients you need to develop niche markets and sustainable tourism concepts – and that’s exactly where the tourism trends of the 21st century are going. Bucharest as the capital city and international metropolis will remain the entry and exit

What is the success recipe behind Pullman Bucharest, considering the long tradition it has on the local market?

The success of our hotel will always be the people working for it. We are in the service industry and without a great team you cannot have any success. We are a wonderful team – many working here since the opening – and this says a lot about us. In addition we have and we always will be staying on top of the trends. Our hotel was one of the first to bring new bedding concepts to Bucharest which are so highly appreciated by the clients that nowadays you can even buy them online and you see them enter also into economy hotels in adapted versions.

We have been one of the first hotels offering WiFi internet access to our clients and today we are the leading hotel offering high speed WiFi free of charge in all guestrooms and public areas of the hotel. We are also playing a leading role in the development of restaurant concepts. Barbizon Steakhouse was one of the first serious steakhouse concepts in town, again copied and followed by others.

What is the strategy you implemented on the local market so far?

It’s not a secret formula. When you are working for an international chain you need to take the full advantage of your quality, standards and procedures which ensure a consistent quality, service and guest experience all around the world and combine them with the local ingredients to create a symbiosis between the international hotel brand and the local community.

Bucharest is a very corporate driven hotel market – and therefore Pullman is the perfect brand for this city because the needs of today’s corporate travelers are in our brand’s DNA. At

Pullman we work hard and play hard!

How important is to your clients a long - standing tradition on the hospitality market?

It’s important because they know and appreciate us. We have a long history and reputation on the market.

That’s why we have so many regular clients always coming back to us.

They know exactly what they can expect from us and appreciate that. Yet, we permanently improve and keep on exceeding their expectations again and again.

What were the most important challenges you had to deal with in the 20 years you have been present in Romania?

Romania and especially Bucharest is a rather small market with a strong share of corporate travel, while leisure tourism has a lot of potential for further growth. Due to this, the market has shown strong reactions to new hotel openings and was also always heavily impacted by global events like 9/11, pandemic fears (SARS, swine flu, etc) and the recent financial crisis from which the market is still recovering.

Starting with 2009 Sofitel became Pullman. How important was this brand change to your business?

It’s been the logic evolution of our hotel after Accor took the decision to upgrade the Sofitel brand to a deluxe chain and introducing the Pullman brand for the new generation of travelers, both corporate and leisure. Pullman is one of the most vibrant and innovative brands in the industry which keeps us under permanent challenge to continue our path of being a market leader. It makes me proud to see how the team is realizing this mission and how much our clients appreciate this.

www.business-review.eu Business Review | December, 2014

EXCELLENCE IN BUSINESS 27

CELLENCE Work hard – Play hard: The essence and DNA of Hotel Pullman A strong brand. 20 years of experience on the Romanian hotel market. Very high quality of its services. Sustainable development. These are few of the main attributes of the well known Hotel Pullman that Markus Koller, the general manager of the hotel tells Business Review.

Photo: Mihai Constantineanu

Part of Accor, the world’s leading hotel operator, it offers unrivalled access to Bucharest’s business community.

Opened back in 1994 Pullman is for certain one of the success stories. Thus, recently Accor was pleased to announce that after 20 years of successful collaboration, it will continue to manage the Pullman Bucharest World Trade Center, for 5 more years. “Pullman is an upscale brand. This means we are providing a wide range of services which our customers are expecting to find at our hotel in a way that we don’t oblige them, yet when they need them they are right there without them even asking for it,” says Markus Koller the general manager of Hotel Pullman.

A significant moment for the hotel was back in 2009 when Sofitel became Pullman. As Koller says, it has been a logical step as the hotel is not a deluxe one and its customers are not expecting this from it. “Pullman is the perfect brand for our location and property. We are located in the heart of the business district, right next to Bucharest’s largest exhibition center,” adds the GM. Asked about the “portrait” of the Pullman customer in Romania, Koller says it is about the new generation of business travellers, tech-savvy and permanently connected. “It’s interesting to observe

how the barriers between work and free time disappear when you see people working on their projects over breakfast, lunch or dinner – sometimes even in the gym. Or they come to Bucharest for business, yet know exactly where to party in Bucharest. Work hard – Play hard. That’s the essence and that’s the DNA of the Pullman brand,” he says.

Always staying close to the needs of its clients seems to be the motto for Pullman. This is why it is amongst the hotels with the fastest Wi-Fi internet connection in the city that it’s free of charge for its clients. “In the future you will be able to not only make your reservation at Pullman via your mobile phone, but also your check-in. You will open your door with your mobile phone, it will be your virtual concierge during your stay and when you check-out you are doing this as well via your phone confirming all your billing details and invoice with a simple click,” says Koller.

Leadership leads to success Pullman hotels are vibrant, cosmopolitan hotels where business and leisure becomes “bleisure”. It is the place to meet for the new generation of techsavvy, hyper connected travellers.

Every employee identifies with their customers, who identify themselves

with the brand and this is how the cycle goes on. “In the service industry, especially in the tourism industry you cannot achieve success without an excellent team. You can own the best hotel in the world, yet without the right people working there you won’t have any success. While on the other hand side a fantastic team can bring success to places you would not have expected,” adds the GM. He also says that he tries to stay close to the team. “We are having success and sometimes we make mistakes which we learn from and grow.”

Asked about what matters the most for the company’s success from the employee’s perspective, Koller is very direct. “We put the needs of our guests in the center of our actions. While other hotels tell to their clients ‘Let us explain you how things are working here’ we are asking instead ‘What can we do for you today?’ and have the solution ideally already before the client is even expressing his needs.”

Planet 21: A sustainable development Sustainability and sustainable development are two concepts that gained a lot of ground in Romania in the last decade.

For example, with Planet 21, Accor has made 21 commitments in favour of sustainable development.

Intrinsically linked to sustainable development, the name Planet 21 refers to Agenda 21, the action plan adopted by 173 Heads of State at the 1992 Earth Summit in Rio de Janeiro. It also echoes the urgent need to focus efforts in the 21st century to change Accor’s production and consumption patterns with the goal of protecting our planet, its people and their environment.

“The core of Planet 21 is the Charter 21 which describes actions around the 7 pillars: Health, Nature, Carbon, Innovation, Local, Employment and Dialogue.

Planet 21 was launched in 2012 with the aim to combine and coordinate all the different actions and ambitions in respect to sustainable development and CSR under one umbrella,” explains Koller. All the 7 pillars are applied in Romania. “Accor always was an industry leader in sustainable development.

Waste separation, child protection, diversity. All those projects were already in place when I came to work for this hotel first time in 2003,” says the Pullman representative. He adds: “Romania hosts one of the projects which Accor supports through the ‘Plant for the Planet’ initiative. We measure the savings our clients realize through the towel and linen re-use programs and a part of those savings is donated for reforestations projects. One of them is located in Romania and Accor financed to date the reforestation of more than 1.000.000 trees in the country.”

Additionally, employees of all Accor hotels in Bucharest and volunteers of “Mihai Eminescu Trust” take part each year, together with the hotel guests and partners in the Planet 21 Day, planting trees in various areas around the city.

“Actually, the 1.000.000th tree was planted by HRH Prince Charles himself.

And that, for us, was an incredible honour,” adds Koller. “Together with our local partners, “Mihai Eminescu Trust”, with this initiative we won the first price at the Civil Society Gala” – Environment Protection section, as well as the Impact Award,” he concludes.

www.business-review.eu Business Review | December, 2014

30 TELECOM

Strict targets and massive investments line IT&C road The Digital Agenda for Europe 2020 aims to achieve a single digital market, spread fast internet access, boost R&D and develop digital skills among the public. This should bring substantial benefits for Romania, but the level of investments that the country must make by 2020 to comply with its strict IT&C targets is EUR 3.9 billion.

1

2

1. First panel: moderator Tony Romani, manager in transaction advisory services, E&Y Romania; Diana Voicu, secretary of state, The Ministry for Information Society; Catalin Marinescu, president of ANCOM 2. Representatives of local operators: Mihai Tudor, head of service quality & efficiency management, Orange Romania; Marius Maritescu, core & services director, Telekom Romania; Mircea Beju, director network deployment and technology enterprise solutions, Vodafone Romania

∫ OTILIA HARAGA Digital Agenda sets Romania on path to the single market By 2020, the implementation of this strategy is expected to boost GDP by 13 percent, increase the number of jobs by 11 percent, and cut public administration expenses by 12 percent, representing EUR 26.6 million per year, Diana Voicu, state secretary in the Ministry for Information Society, said during the Focus on Telecom event organized by Business Review.

The digital targets that Europe has set for Romania are very ambitious, given that last year, 42 percent of the population had still never used the internet.

The Digital Agenda aims to reduce this to 30 percent.

Only 45 percent of the public used the internet on a weekly basis, according to last year’s statistics, but by 2020, 60 percent are expected to do so.

Among the poor, only 27 percent used the internet weekly in 2013. By 2020, this is expected to reach 45 percent.

Despite discouraging digital liter-

acy data, fixed broadband internet coverage has seen a surge in rural areas, reaching 78 percent in 2013, while mobile broadband coverage reached 41 percent.

Only about 8 percent of Romanians shopped online and 13 percent of large companies and 9 percent of SMEs sold their products online in 2013, according to data presented by Voicu.

From 90 percent broadband coverage in 2013, Romania must reach full broadband coverage by 2020. In 2013, broadband coverage at speeds of 30 Mbps stood at 66 percent, but it must climb to 80 percent by 2020. Similarly, fixed broadband connections at speeds that exceeded 100 Mbps stood at 25 percent in 2013 but must come to represent 45 percent by 2020.

Online sales will be massively encouraged: from 8 percent in 2013, they must reach 30 percent in 2020. eGovernment services must develop substantially, according to the targets of the Digital Agenda. In 2013, only 5 percent of the Romanian population used eGovernment services, but by 2020, this proportion is ex-

By 2020, the National Next Generpected to grow to 35 percent.

While at the moment, only 9 per- ation Network is estimated to cent of SMEs sell their products on- generate 5 percent GDP growth locally, line, the Digital Agenda targets an 8 percent surge in the number stipulate that by 2020, 20 percent of of jobs, full internet access at speeds of more than 30 Mbps and 50 percent them will do so.

The investments that Romania access to speeds higher than 100 needs to fulfill the targets of the Digi- Mbps.

The NGN plan will encourage actal Agenda 2020 total approximately EUR 3.9 billion. The instruments that cess to existing infrastructure, simcan be used to finance broadband and plify procedures for new network NGN development include structural developments, stimulate private infunds, the Connecting Europe Facility vestments in infrastructure and improve transparency in civil works, and private investments.

The single digital market is not an said Voicu. option for Europe, it is a necessity. If Europe fails to make the transition to Telecom players plead for the single digital market, there will be better collaboration with heavy costs which will amount to at authorities least 4.1 percent of GDP by 2020. This “There are very high volumes of data has been evaluated at EUR 500 billion, that must be transferred via the which would mean EUR 1,000 per telecom networks and the degree of capita. digitalization, especially in rural According to estimations, a 10 per- areas, will also increase. This will cent growth in broadband penetra- mean that we must sign partnerships tion boosts GDP by up to 1.5 percent, with local authorities, something we said Voicu. are very interested in,” said Marius Broadband development comes Maritescu, core & services director, first and foremost among the priori- Telekom Romania, during Focus on ties of the Digital Agenda.

Telecom.

www.business-review.eu Business Review | December, 2014

INTERVIEW 31

1

3Q Stefan Iarca country head, CarnationGroup, part of Possible

2

What development plans do you have for the next couple of years?

Technological development, in e-commerce and not only, is very important for us and we will continue to innovate.

Mobile gaming is another important pillar of services where we are pursuing the first major development in 2015.

Many people now say, “Content is king” but personally, I would bet that, “Entertainment is king.” I would like to see a shift in budgets towards entertainment, towards “real customer satisfaction.” I hope to see it in 2015.

What turnover and profit do you estimate for this year?

The financial indicators will be communicated after the second quarter of 2015.

We are focusing on both the local and regional market, given the substantial growth of the Turkish market and the average growth of the Bulgarian one.

indicating the coverage of these networks in every Romanian locality, and indicating the situation of the available infrastructure elements. According to institution officials, telecom players will send the authority data regarding the network segments, points of access to the network, and so on.

The three largest telecom operators in Romania are expanding their 4G networks at a rapid pace.

How active are you in mobile gaming in Romania?

Mobile gaming is very important to us and we are bringing a series of bestpractice in the European area and in Romania. Possible’s innovation center is located in CEE. Also here is the gaming division Possible Games. The latter is the youngest spinoff of the agency which has recently launched several very well received products on the local market: Small and Furious, Die Hard (the game of the latest Die Hard film, with 4 million downloads), The End app (with 9 million downloads) but also products such as Smart Egg. Games currently represent around 33-35 percent of the number of downloads on mobile devices while on tablets the rate is close to 50 percent, which makes this type of communication a very attractive environment.

otilia.haraga@business-review.ro

otilia.haraga@business-review.ro

1. Second panel: moderator Sergiu Negut, managing partner, Mindit; speaker George Cozos, partner channel development manager Microsoft 2. Second panel speakers: Stefan Baciu, channel manager, business analytics, South Eastern Europe, IBM; Stefan Iarca, country head, Carnation Group, part of Possible; Alexandru Molodoi, CTO Idea City

Unfortunately, relations with the authorities are not always smooth, complained operators.

“We come across rather big difficulties in obtaining authorizations for setting up our mobile stations, which makes us adjust things as we go,” said Mircea Beju, director of network deployment and technology enterprise solutions, Vodafone Romania.

“There were situations when decisions by local councils impeded the installations,” confirmed Mihai Tudor, head of service quality & efficiency

management, Orange Romania. He added that the equipment must be replaced frequently. “We are talking about life expectancy of at most five years for the equipment we are using.”

Last month, the Romanian telecom watchdog ANCOM announced that it had come to an agreement with telecom players on the format and way to transmit the information necessary to compile the inventory of public telecom networks and available infrastructure elements. The authority will be able to compile maps

www.business-review.eu Business Review | December, 2014

32 HOW TO WEB

‘Sales & marketing is a big problem in Romania’

‘Startups need to get to a conditional yes’

Previously a client-facing senior executive at Yahoo! and China Search International, Marvin Liao is currently working with promising startups across the globe in 500 Startups, based in Silicon Valley.

As managing director at Techstars, Jens Lapinski is currently responsible for selecting startups for investment. He outlines a few rules that entrepreneurs can apply to start off their business on the right foot.

∫ OTILIA HARAGA

∫ OTILIA HARAGA

You have worked with startups from all over the globe. Does that also include Romanian ones?

Yes, over the last three years or so. I am on the advisory board of ChargeAds.com, which is based here in Bucharest. The founder is a good friend of mine; his name is Mihai Fanache.

As managing director of Techstars, can you suggest a few principles for a lean startup?

What you want to find is a market where there is a significant demand for your product and very little competition. You look for that opportunity and when you think you’ve found one, you go to potential customers and say: “I think you have this problem. If I build a solution for you, would you be happy to pay me?” Something along those lines. And then you see what the customer says.

What I tell entrepreneurs is that the best technique that I know is to get to a conditional “yes,” when the customer says “Yes, I will pay you and this is how much I will pay you, provided that the following conditions are true.”

If you have two or three people who say that, even if it’s not a legally signed contract, the probability that you will be able to actually build a business is very, very high.

So what are their biggest needs and challenges?

There are a lot of challenges. Technical talent is not an issue here; there is a lot of technical talent. Sales & marketing is a big problem, which is really interesting, because when you’re a country like Romania, which is relatively small, the people are very Western minded, education is pretty good and the level of English is amazing, so it is very surprising to me that more Romanian companies do not think globally or regionally from the beginning. I haven’t figured out why. Also, another concern of mine is that people do not think big enough.

What are the hot investment areas as seen from Silicon Valley?

Fin-tech companies are popular, and the internet-of-things – so the hardware plus software combination – is very popular now. But my advice, as an investor in startups, is: “Don’t invest in something that is popular because you’re going to lose your money.”

Have you been a solo investor yourself?

I did six or seven angel investments before I joined 500 Startups. I am not a great investor, but the thing is that most of your early – all your early investments – are going to be horrible because you don’t know what you’re doing. You learn by basically losing money. I feel like I am a much better investor now because when you make bad investments, you get better pattern recognition.

What is your activity at 500 Startups?

I spend 50 percent of my time on the accelerator that we have in San Francisco, probably another 20-30 percent on my seed portfolio (because we are a venture capital firm too, so I make investments there), and the rest of the time on fundraising.

How much do you typically invest?

We have invested in over 900 companies now. The typical investment check we give is between USD 50,000 and USD 100,000. We invest in valuations of companies from USD 1-5 million. Most

of our exits have taken place when the companies we invested in are bought by other companies. Usually, we make an exit after between two to five years. We are early stage and usually the cycles are rather long.

Have you invested in any Romanian startups?

Not on the accelerator but on the seed fund, we have invested in a Romanian company out of Cluj called Pangea. (ed. note: which develops technology that supports internet use on mobile phones, without the need for a data connection or Wi-Fi.) We invested in June or July.

What regions are most companies you invest in from?

Probably about 70 percent of them are from the US and 30 percent are international. But it depends. In our present batch, 30 companies are from Mountain View, San Francisco. Of our present batch, we have 53 percent international companies, including Canada. In the US, startups are more sales & marketing driven than elsewhere, but generally entrepreneurs are entrepreneurs.

How was your experience at Yahoo!?

I spent ten and a half years at Yahoo!. I spent two years as a brand manager in the international marketing group, three years in global sales operations, three years in global sales strategy and three years in the emerging markets group, which first brought me out here.

I left Yahoo! about three years ago because I wanted to do something different. When I joined the company, there were about 3,000 people and when I left there were about 14,000 people, so it was a very different company. otilia.haraga@business-review.ro

What emerging entrepreneurial hubs have caught your eye in Eastern Europe?

Russia is definitely an economy that is legally, culturally and economically somewhat closed off to the West, so the big companies that have been built in Russia are partly or largely companies that resemble those that have been built in the US. You have the social network, search engine and classifieds, all the same categories, but because American companies cannot penetrate the Russian market, they have the monopoly.

By contrast, really small countries like Moldova or Slovenia cannot build a multi-million dollar company that just serves that respective market. That is actually good news because people don’t try. What they do is go international right away.

Also, there are a couple of market segments where you can build very successful companies; it doesn’t matter where you are. The best example of that is mobile gaming, because you publish your game at the app store and all your marketing is digital, so you don’t need to have physical customer contact.

So for Romania the solution would be a mixed plan?

For any country that is this kind of size, you have three options. You can build a local company that copies an

existing model from somewhere else. You will not build a multi-million dollar company but you can build a meaningful company with maybe 200 employees or something like that.

Another thing that you can do is utilize something that is called the Israeli model: you leave the R&D in your country or the engineering and move the commercial operations to another location where it makes more sense.

Such an example from Europe is ZenDesk, started in Copenhagen.

A third approach that you can take is run a business where it doesn’t matter where you are, you could just as well be in Romania as anywhere else.

But to build a multi-million dollar company headquartered in Romania, that is very hard.

Are all the startups admitted into the Techstars program from the UK? In the program in London, we had 11 companies that we’ve invested in – three of them were from the UK, one of them was from Ireland, two were from the US, and one each from Germany, Spain, Israel, South Korea and Estonia.

Did any Romanian ones apply?

Yes, definitely. I cannot remember which ones they were but I remember talking to and interviewing one or two Romanian entrepreneurs.

What is the level of investment?

We always invest USD 120,000. We get founders’ stock so we exit typically at the same time an entrepreneur would exit. So when a company is acquired, or when there is a very large investor who comes in and wants to buy a certain stake in the company, sometimes we sell our stake.

Can you give a few recent examples of startups that were selected?

We have 14 different programs. In seven of them, they can invest in anything, no restrictions, while certain programs have a very strong vertical focus and these are typically done in collaboration with one large industrial partner. In London we invested in a company that is building a new version of e-mail or in a company that allows you to buy food and merchandise at very large stadiums; we invested in a social network for mothers and also in a reputation management company. otilia.haraga@business-review.ro

www.business-review.eu Business Review | December, 2014

HOW TO WEB 33

‘ The startup community is seen as higher risk’

‘Romania attracts a lot of Hub:raum’s interest’

The angel investing community in Europe numbers about 300,000 investors. Mike Doherty, program manager at Angelsbootcamp, tells BR that there are ten times more potential business angels out there.

As investment manager at Hub:raum, DT’s incubator, Luka Sucic has a lot of insight into Romanian companies. One has already been accepted into the program and another two seem viable candidates, he tells BR.

∫ OTILIA HARAGA

∫ OTILIA HARAGA

According to Angelsbootcamp, there are about 300,000 active angel investors but millions of potential ones. How would you comment on this?

The information comes out of studies from EBAN (the European Trade Association for Business Angels, Seed Funds and Early Stage Market Players) and some other sources and basically we understand that there are probably around 3 million people that have the capabilities to become angel investors within Europe, of which we see about 10 percent in the active community, which is the 300,000 number. The challenge is that most of these individuals are currently investing in more traditional asset classes than startups, such as in real estate or stocks. The startup community and angel investing are perceived as difficult and higher risk. But typically, the 90 percent are okay with the risk. The risk is not what is preventing them but the perception that angel investing is difficult.

What differences are there between Hub:raum and the typical seed fund?

A lot. The basic one is that we are a telecom seed fund that serves a specific purpose. We are part of Deutsche Telekom, and one of our primary objectives is to find and identify innovations, really good opportunities and disruptions in the telecom field. What differs is that for us one of the most important things is the impact of revenue and innovation on our national companies.

So, we take the deals that we invest in and we launch them in different markets.

In Romania we have two deployments right now. I believe they are going to be launched within the portfolio of Telekom Romania. One is called Omnipaste and the second is called EcoisMe. Both of them will be launched in the DT portfolio within three to six months. Omnipaste is a startup from Sibiu which works on universal connection between devices. EcoisMe is a sort of smart algorithm that detects in real time what devices are connected in your house and can name them.

Do you have any data on the degree of risk of angel investments?

In the startup community, four out of five or eight out of ten businesses fail.

What we do know is that if you raise angel capital, that number doubles, so it goes from about 20 to about 40 percent. The reason is that the capital lasts you longer, it may or may not get you to the five-year point but you’re going to be around past the 18 months point, so what we know is that with outside investments, you typically can double the odds of success.

How would you encourage angel investors in the SEE region?

We have about 25 years of data which shows that when you have a portfolio of six or more companies, there is a great likelihood that you’re going to generate either your return on investment or some sort of profit. And we see that when you have a portfolio of 12 companies, that doubles again. We need angel investors to be successful early on because then they will come back and put more money in it. If they make their first investment and it fails, then they tend to think it is too risky. What we see primarily in Europe is that 97 percent of the angels co-invest, so they are not taking the risk alone. What we want to see is the local SEE angels create networks so that they can co-invest.

What level of involvement is required?

That is primarily a function of the investor. The challenge with our approach is that you cannot be hands-on with ten companies; you need to be more in an advisory role, checking in on a monthly basis or something like that. The true hands-on angel investor only has the time to do one or two companies so that limits their ability to build their portfolio.

The really important element of working with ten companies is when they begin to have the discipline to create the reporting structure that you need.

As program manager at Angelsbootcamp, what do you do every day?

We have done three of these, and we are going to do more in 2015. One of the things is to evaluate what works in our program and what doesn’t. Also, as a program director, we raise money to support the program so we are talking with partners, both for financial reasons so that we can have sponsors, but also we are talking with the EIF and EBAN, because we want to aggregate some of the European resources through our program so that we can explain them.

The EIF has a USD 7 billion fund that supports the startup ecosystem but not everyone knows how to tap into it. Almost all tax information and tax benefits are local by nature. So we want to aggregate that information so that you can look it up online and say: “Hey, I’m in Romania, what matching funds are available to me, what tax benefits can I get?” We are gathering the information; it’s still in the early stages.

What are angel investors in SEE specifically interested in?

What we are seeing in newer cities is really more about the onboarding process.

They want the baseline of angel practices because it is new to them. For them, it is actually about instructional information to make sure they understand what they are getting into. otilia.haraga@business-review.ro

What type of ventures does hub:raum finance?

Since we are a telecom fund, we usually finance startups with telecom synergies: anything from telecommunications to internet-of-things, machine-to-machine, e-commerce, cyber-security, all sorts of things. Basically, what we are trying to find is something that we can offer to our customers and make them happy along the way – to help startups grow and at the same time help our national companies grow.

What are the eligibility conditions?

Basically, they just need to apply.

They should go to our website or contact one of us because we meet frequently in Romania. We have a Romanian colleague working for us and I am also here every couple of months. They just need to submit an application and then do a pitch for us and basically prepare sort of a telecom synergy point of view. It’s not a complicated process, basically a half hour discussion. We also have an acceleration program in Krakow that lasts for eight days and we use it as a sort of additional evaluation procedure.

How do you prepare for failure?

One out of ten will succeed, that is the general rule, but we are trying to minimize that by selecting only the best ones and trying to make sure they have the product market fit, they have all the pre-conditions that are necessary for a startup. We mentor them and coach them along the way from the start because we also invest in prerevenue and pretraction, a sort of conceptual phase, alpha or beta version, and then we take them along the way with us with a lot of our mentorship and development power.

Then we launch them into the country and they can really see from early on what works and what doesn’t and what they need to change.

How many Romanian startups are there in the program right now?

At this point we have five investments, one of which is Romanian. I am referring here to Omnipaste. We also have two Romanian teams we are in discussions with right now. So, possibly, by the end of the year we could have three. Romania represents a big portion of our interest and also activities.

There are a lot of vibrant things going on here.

What is the average investment you make in a startup?

In general we invest EUR 80,000. For us the exit does not matter. If it never happens but it still generates revenue for our national companies, we are perfectly happy. If it happens, super, but this makes us different from everyone in the field except for corporate venture funds. For us, generating revenues and bringing value to the national companies is the most important part. otilia.haraga@business-review.ro

www.business-review.eu Business Review | December, 2014

34 HUMAN RESOURCES

WHO’S NEWS BR welcomes information for Who’s News. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro

Robert Arsene

stepped down as general manager of agribusiness group Agricover in December, according to ZF. He had held the position since 2007 and is one of the best known executives in the local agribusiness industry. Arsene, 49, began his professional career with Coca-Cola HBC. In 2001 he was appointed country manager of Bunge and five years later he started his own business. Arsene’s duties will be taken over by Stefan Bucataru and Robert Rekkers.

Bogdan Aurescu

has been appointed foreign affairs minister by PM Victor Ponta. He is replacing Teodor Melescanu who resigned after only eight days in office – the shortest term a Romanian minister has served since 1989 – following irregularities in the voting process for the presidential elections outside Romania. In his turn, Melescanu replaced Titus Corlatean who resigned for the same reason. Aurescu is an experienced diplomat best known for representing Romania in an international dispute with Ukraine on the Black Sea continental plateau and winning the case.

Aurescu’s previous position within the ministry was secretary of state.

He joined the Ministry of Foreign Affairs in 1996.

Sorana Baciu

has resigned as OMV Petrom’s strategy director to start a new consultancy business, according to ZF. She had held the position for the past seven years. Baciu previously worked for ING (1997-2001 and 2002-2004) and also for Porsche Bank Romania where she was deputy general manager for four years. She is a graduate of the Bucharest Academy of Economic Studies (ASE) and also holds a master’s degree in international economic relations from the same institution. Baciu also graduated

from a master’s program in management at McGill University in Canada.

Ciprian Banica

is the new creative director of Atelier Sapte and Grup Sapte.

He has over ten years of professional experience in advertising, having previously worked for agencies such as Mercury360, Violet, Brandstalk, Next and FCB. His portfolio includes several award winning campaigns. ARE

Paolo Coletto

has been appointed a member of the Generali Romania board for a four-year term. He is the company’s financial director. His professional experience in insurance spans over 27 years, the last 12 of which were spent in various management positions. He began his career in 1987 with Toro Assicurazioni SpA, part of Generali Group. Before coming to Romania, Coletto served as risk management director for the group’s north-west subsidiaries. He has a degree in economics and is specialized in mergers and acquisitions.

Charles Crocker

has been appointed a member of the management board of the BritishRomanian Chamber of Commerce (BRCC). He is the managing partner of Front Line Consulting. Stan Dunlop, partner at Dunlop Mills, and Neil McGregor, the managing partner of McGregor & Partners have been appointed to the same position. The association’s management board has also elected two vice-presidents: Colin Lovering, vice-president of Achieve International, and James Grindley, vice-president at Certasig.

Calin Galaseanu

has been elected president of the Romanian Association of International Medicine Manufacturers (ARPIM). He is the country manager of Bristol Myers Squibb. Elena Mitova, general director of Novartis Romania, and Mihail Briciu, general director of Novo Nordisk, were elected

as vice-presidents. The other board members are Luana Ionascu, general director of Ipsen Romania, Nolan Townsend, general director of Pfizer Romania, Adrian Grecu, general director of Abbott Romania, and Fabrizio Giombini, general director of MSD Romania.

Adriana Grecu

has been appointed interim CEO and new statutory general manager of Aon Romania, replacing Valentin Tuca, who will leave the company in June 2015. Tuca joined Aon in 2011 and has also held regional responsibilities in as cluster manager of the South-Eastern European countries where the company has operations.

Grecu’s current position is chief broking officer (CBO). Her appointment becomes effective as of December.

Diana Moroianu

has joined Clifford Chance Badea as associate lawyer.

She has six years of professional experience in business law, having worked with international law firms since the beginning of her career. Over the years, she has built a legal advisory portfolio in banking as well as M&A deals, advising businesses such as retailers, pharmacy chains, and credit institutions. In the banking industry, she has been involved in projects related to crossborder finance, finance restructuring, syndicated loans, acquisition finance, project finance and real estate finance. Moroianu, 30, will be part of the law firm’s banking, finance & capital market team coordinated by managing partner Daniel Badea. She graduated from the Bucharest University Law School in 2007 and has been a member of the Bucharest Bar since 2008.

Daniela Pene

has been appointed a member of the Generali Romania board for a fouryear term. She is the company’s sales and marketing director. Pene has 15 years of professional experience in the insurance industry with a

focus on sales. Over the past nine years she has held various management positions within the company. She started as head of the retail insurance department and was promoted to her current position in early 2014.

Pene graduated from the Marketing Faculty, part of the Academy of Economic Studies in Bucharest.

Florin Pogonaru

has resigned as member of the supervision board of Banca Comerciala Romana (BCR).

His resignation comes after the European Financial Services Center (CEFS), which was founded by Pogonaru and where he acts as partner, is in the process of closing a joint venture with an international fund in order to buy nonperforming loans from all Romanian banks, including BCR. He is also chairman of the Association of Romanian Businesspeople (AOAR) and is involved in several local companies.

Anda Marian

has joined executive search firm Pedersen & Partners as principal to its Bucharest office. She holds professional experience in leadership consulting, with a focus on assessment and selection, as well as in career advisory and management development Marian has previously worked for an advisory firm specialized in retained direct executive search where she held various management roles including executive director and knowledge management director. Before joining the executive search industry, she had acquired expertise in the real estate and the television industries, having worked with companies as Hercesa International and Coldwell Banker.

Philanthropy

Interview

Premiere

Business Review presents a list of charities for your consideration during this season of goodwill to all

Spanish dramatist Jose Sanchis Sinisterra tells BR about new themes that are emerging within contemporary theater

Comic ballet The Wayward Daughter is the second premiere of the season at the Bucharest National Opera

»page 32

»page 36

»page 40

Lifestyle www.business-review.eu

AprilDecember, 2014, Number 2014 2

The light of giving

www.business-review.eu Business Review | December, 2014

36 CHARITIES

‘Tis the season to be giving With so many organizations to choose from, selecting a trustworthy and reliable charity for your special Christmas gift may seem overwhelming. BR outlines a selection of Christmas charity projects so you can tailor your festive spirit to the ones with the most appeal.

Asociația Comunitară a Romilor din Coastei (Community Association of Roma from Coastei) Contact details: asociatiacomunitaraaromilor@gmail.com Located: Cluj-Napoca, Cluj county Further details: A grassroots organization from Pata Rat, Cluj-Napoca, that mobilizes the community to support steps involving the national and local public authorities regarding the Coastei street evacuees and other individuals and groups at risk of eviction and organizes activities for children and young people.

Agenția de Dezvoltare Comunitară Buzau (Buzau Community Development Agency) Contact details: Ana Raducanu, araducanubz@yahoo.com Located: Biscenii de Jos village, Buzau county Further details: A long-standing organization that works with poor communities in Buzau county.

Asociatia Esperando (Esperando Association) Contact details: office@esperando.ro, www.esperando.ro Located: Baia Mare, Maramures county Further details: The Esperando Association works with people with disabilities and their families. It runs a day care center hosting physical therapy and education activities.

Asociatia SOS – Sprijin oricarui suflet, Aghiresu (SOS Association - Support any Soul) Contact details: Maria Lacatus, medsan06@yahoo.com Located: Aghiresu, Cluj county Further details: An organization that has worked with women and children in the Aghiresu area for five years.

Asociatia Sf Stelian (St. Stelian Association) Contact details: Steliana Stefan, stefan_steliana@yahoo.com Located: Bucharest Further details: Beneficiaries are different categories of vulnerable people and those in need. It has a social center and supports various poor families Asociatia Stea (Stea Association) Contact details: Cristina-Maria Bala, asociatiastea@gmail.com Located: Satu Mare, Satu Mare county Further details: The STEA Association is a Romanian NGO that supports the social inclusion of vulnerable chil-

dren/young people/families (over 90 percent of the beneficiaries of its social services are Roma), in Satu Mare county. It also works with homeless people and tries to integrate them on the labor market.

Casa Ioana Contact details: office@casaioana.org, www. casaioana.org Located: Bucharest Further details: Casa Ioana is a domestic abuse and family homelessness charity.

Its integrated Acasa program meets the particular needs of families and individuals over an extended period.

It works with a broad network of both public-sector agencies and other service providers to help women and children resolve all their problems and acquire the necessary skills and assistance they need to regain family stability and affordable housing. It addresses the multiple underlying issues of domestic violence and family homelessness, rather than simply focusing on providing short-term emergency shelter.

Centrul de Resurse Apollo (Apollo Resources Centre) Contact details: Lucian Gaman, luciangaman@yahoo.com Located: Ploiesti, Pravoha county Further details: This group has worked for many years with poor communities in Prahova county.

Fundatia Sf. Dimitrie (St. Dimitrie Foundation) Contact details: Elena Avramescu, centrusfdimitrie@gmail.com Located: Bucharest Further details: The foundation has a social center for children and a protected workshop where disabled young people can work.

Fundatia Inocenti. Romanian

Children’s Relief Contact details: Valentina Maghirescu, valentina.maghirescu@inocenti.ro, inocenti.ro Located: Bucharest/ Bistrita/ Cluj Napoca Further details: The foundation provides support to children in need and to their families. It offers activities to children aged up to 18; it supports families and caretakers in developing their parenting skills and works to prevent the abandonment of children; it offers educational activities to improve social integration; it recruits volunteers and gathers material resources for local partner hospitals.

Foundation Theranova Contact details: Jaco du Plessis, theranova@theranova.ro Located: Oradea/Bucharest Further details: The charity provides prosthetics for amputees in desperate need. It gives highly functional prostheses to, in particular, children who cannot afford it, to help them achieve in life with maximum mobility, without limitations. Theranova is also committed to raising awareness among medical professionals and policy makers to increase support for amputees from the Romanian government and health insurance.

Impreuna pentru viitor (Together for the Future) Contact details: Cristina Costea, cristinacostea89@yahoo.com Located: Spantov village, Calarasi county Further details: A new organization, founded in 2012, that works to help develop the Spantov locality, which has a high number of ethnic Roma residents. Each year during the Christmas and Easter holidays, members of the association try to gather goods and food for the poor families of Spantov.

Light into Europe Contact details: office@lightintoeurope.org, www.lightintoeurope.org Located: Bucharest/ Essex, UK Further details: Light into Europe’s mission is to develop the full potential of Romanian sensory impaired children and young people to lead independent lives by providing educational support services to schools and families with sensory impaired children from its resource center; developing integrated early intervention and employment support programs;

being a catalyst for the social and professional inclusion of sensory impaired people.

SoNoRo INTERFERENCES Contact details: Maria-Clara Brumariu, mariaclara@sonoro.ro, www.sonoro.ro Located: Bucharest Further details: The goal of the program is to broaden the cultural and musical horizon of young music students and to help them develop their creativity and professional skills at the beginning of their career. Since its establishment it has awarded over 200 scholarships. Many of the scholarship winners have attained outstanding results studying in prestigious musical institutions in London, Berlin, Vienna, Zürich, Hamburg, Bucharest and Vienna as well as winning prizes at major international competitions.

The Little People Contact details: contact@thelittlepeople.ro, www.thelittlepeople.ro Located: Bucharest/ Timisoara/Iasi/Cluj Napoca/ Chisinau Further details: The mission of the organization is to improve life quality for children and young people suffering from cancer. It provides psychological and social support services to patients, organizes events for cancer survivors, provides material support for the dedicated hospital sections and donates appropriate equipment.

Zambete pentru pici, pitici si piticoti Contact details: Anca Zegrean and Teodora Motatu, zambete@gmail.com Location: Bucharest Further details: The charity’s main goal is to aid orphans and children in extreme poverty by providing contributions in the form of clothes (new and second-hand), food supplies, toys, cleansing products and in some cases fire wood. It takes a particular interest in talented and academically gifted children, aiming to achieve both an immediate and lasting change in their lives, by providing them with educational supplies and helping them to fulfill their potential. It has a partnership with Sector 3 City Hall’s Child Protection division, organizing charity campaigns for Christmas, Easter and Children’s Day. editorial@business-review.ro

www.business-review.eu Business Review | December, 2014

38 INTERVIEW

Spanish playwright: ‘There’s an infinity of urgent themes to be tackled by theater’ In Bucharest last month to stage the play We Were Three Sisters, based on Chekov, prolific Spanish dramatist Jose Sanchis Sinisterra told BR that a series of themes such as the visibility of women, immigration and the relationship between theater and science are not yet explored enough. ∫ OTILIA HARAGA

Writing wise, what are your newest projects?

This year, in 2014, I have written two new texts. One is called Bartolome Encadenado (Chained Bartholomew). It premiered in Barcelona this July. It is a tragedy; it has the structure of the Greek tragedy and a contemporary political theme. It was inspired by the tragedy of the Greek pensioner who committed suicide in Syntagma Square in Athens.

This was a piece I had to write but it interested me a lot. And last week was the premiere of a very heterodox version that I did of Richard III by Shakespeare.

What’s your view of contemporary theater?

I started at the end of the 50s, in the university theater in Valencia. I had always written but as a regular activity of writing and stage works and forming actors I started in the 70s, during my time in Barcelona. I was witness to a very interesting renaissance of dramatic writing, of the dramatic text, of the literary dimension of theater which right in the 60s and 70s saw a moment of collective creation: the theater of the body, the beginning of the use of non-verbal audiovisual languages. In that effervescence, the text was considered a type of theatrical anachronism because theater was thought to be what was being created on stage, the body, the actors, the directors, the public space. And then I started a systematic work, a bit stubbornly to recover theater’s literary text that is not in contradiction with the spectacular component or with the participation of the bodies of the actors.

Photo: Vivi Porras/Cervantes Institute

What are you working on right now?

My main activity is centered around a small space; it’s not a theater hall, it is a theater space where we hold workshops, do research, debate and stage dramatized readings. We have been developing it for the past four years since the Nuevo Teatro Fronterizo (the New Frontier Theater) opened in La Corseteria. We try to support and form new playwrights, do research on the relationship between the theater and philosophy, the sciences, the representation of women in various contexts.

We also have activities with the immigrants in our neighborhood because the place is located in Madrid’s Lavapies neighborhood, which is a completely multicultural neighborhood.

Let’s say, between parentheses, that my professional career has always been linked to literature, having taught literature at the university. Literature is my land, my passion in life, and I couldn’t bear seeing the literary text assigned a purely subordinate role. So my research work and my creative work have been with literary material, not theatrical, simply in order to question the dominant theater. And in those years there was a type of re-emergence of dramatic writing, both in Spain and Latin America and several European countries and I think now the text is no longer considered as a secondary factor but has an equal position to innovation, experimentation and as a way to look at reality, as can be all the other languages of theater. So I’m relatively optimistic, and within this I would criticize the market, which is conditioning a certain type of theatrical texts that are excessively complacent. There’s a series of themes that are not explored because they are not believed to be attractive enough.

What themes?

I would say, for example, that in Spain, where we have a government that is literally massacring culture with budget cuts, of course theater companies tend

to perform a more entertaining type of theater, a more comical one, with themes of relationships, in general with more visible themes because they can connect with the public more easily. I think there’s an infinity of urgent themes to be tackled by theater and this is the central line of this project of the Nuevo Teatro Fronterizo: to see what is missing from Spanish theater, what are the theme-related flaws but also the formal ones, related to the poetics of the theater. And here we are doing a series of workshops, laboratories.

What is contemporary Spanish theater like? Is there something specific about it?

I don’t like generalities. I would say that it has a relative diversity, with absences that are, in between quotation marks, scandalous, themes that are not tackled because theater does not present them.

It is interesting, nonetheless, that over the past three-four years a theater that is very connected with the immediate reality is emerging. It is bringing type of themes that are well connected with people’s preoccupations.

What are the new themes and instruments of the theater?

This depends a lot on individual choices.

I would say that when I decided to open the space in Madrid, without any official help, I drew a series of lines of work that seemed to me were missing. For instance the theme of the woman. The woman, despite having conquered a certain position in certain sectors at the end of 20th century, has been completely forgotten in others, not to mention women’s own families. And so I developed various project that deal with the visibility of women. In Spain, in the first third of the century there were many women who, within a traditional, catholic, patriarchal society were trying to make it in the world of sciences. We’ve done some research and selected five women from the first half of the century and made it into a text.

Another theme is immigration. Of course, in the 90s, the theme of immigration began to be more visible. Many young authors wrote on this theme, but it was a theme of denunciation, of the tragedy of the African without legal papers crossing the border. Now the theme of immigration is much more complex because there are thousands of immigrants wanting to be Spanish.

We selected four immigrants, one from Senegal, one from Columbia, one from Bangladesh and one from Morocco. To each one we assigned an author who had trained with me. They were together for several days, recording their experience, they told their stories of crossing many countries many times, of being rejected by society.

Then there is a show with Spanish actors performing, under a Spaniard’s direction. When the show ends, the immigrant subject, the director and the author emerge and a debate starts with the public. It’s been very interesting because people have told me that they never thought of this mass of immigrants as individuals.

Another theme is the relationship between theater and science. The world is in the hands of science. And we believe this calls for some reflection.

We formed a group of scientists and young playwrights and from here a text which is not science-fiction but which raises scientific questions emerged.

Also, in Spain I would be able to name one, maybe two authors writing a theater of ideas, which makes one reflect on issues. Another flaw is that Latin American theater is practically unknown. otilia.haraga@business-review.ro

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40 FESTIVAL

Putting Romania on the map: cultural festivals For several years now, Romania has been a cultural hotspot for the performing arts, film, theatre and music.

Looking back over the cultural calendar of 2014, BR highlights the top festivals held around the country.

Cluj-Napoca is the location of the Transilvania International Film Festival and more recently of a comedy festival

∫ OANA VASILIU Lights, camera, action: film Cluj-Napoca was the talk of the cultural world from May 30 to June 8, during which the Transilvania International Film Festival (TIFF) screened over 217 movies from 55 countries, complemented by countless related events such as exhibitions, concerts, master classes, debates and parties. The 13th run of the event attracted over 160,000 cinephiles and 1,000 special guests, with 63,000 tickets sold for various events. Director Tudor Giurgiu, also director of the festival, used the event to launch his campaign to save Romania’s silver screens and revive the once-loved local pastime of going to the cinema.

Statistics presented by Giurgiu show that currently just 25 movie theaters out of 30 are still active in the state-owned Romania Film network, including only six modernized halls with digital equipment. Last year, 450 movies were screened in Romania, of which 198 were premieres. In terms of admissions, ranked by the origin of first-release feature films, 250,000 people watched Romanian-made films in 2013, 100,000 movie goers selected European productions, whereas almost 8 million people viewed American movies.

In October, Cluj-Napoca was again in the spotlight, during the Cluj Interna-

tional Comedy Festival. The event involved 147 film projections in nine different locations, the screening of 192 movies from 38 countries across four continents and over 100 special guests who entertained the public for ten days, as well as jazz concerts, theater, dance and parties, all put together by over 200 organizers, both festival employees and volunteers.

The capital, Bucharest, sees almost weekly film events under various festival umbrellas. One of the most hotly anticipated film festivals was Les Films de Cannes a Bucarest. Screenings sold out and new projections were arranged to allow local fans to see on the silver screen what the Cannes jury awarded in 2014. Over 14,000 viewers watched the 30 movies brought to Romania by director Cristian Mungiu.

A record number of animated films were submitted for the ninth edition of the Anim’est festival – over 1,260 short and feature-length movies – of which 400 productions from over 60 countries made the cut and were shown in Bucharest. Competitions, retrospectives, Q&As, workshops, events and parties were held for fans of the genre.

Some 120 films from 40 countries were screened during the 20th run of the most important documentary festival in Romania, Astra Film Festival, which is held in Sibiu. This year included four competition sections: inter-

national, featuring works from Frederick Wiseman, Michel Gondry and Corneliu Porumboiu; Central and Eastern Europe, tackling subjects that define the region’s identity and portray realities unknown even to neighboring countries; student, featuring productions by young directors from the university centers of Geneva, Manchester, London, Munich, Budapest, Bucharest and San Antonio de los Baños (Cuba); and Romania, showcasing local films.

All the world’s a stage: theater The third most important theater festival in Europe (after Edinburgh and Avignon) is held in Sibiu. The 21st edition of the Sibiu International Theatre Festival took place in June, with 20,000 tickets selling out far in advance. The event gathered participants from 70 countries and presented 350 shows in 66 venues to over 62,000 daily spectators.

Bucharest International Street Theatre Festival is now a much looked forward to fixture on the capital’s calendar thanks to the colorful characters enlivening unconventional spaces around town. Performances by the Shakespeare’s Globe troupe are always a highlight.

The sounds and the echoes: music For 18 years now, international jazz

music has emanated from the Romanian mountains, via the small village of Garana in Poiana Lupului, Caras Severin county, courtesy of Garana International Jazz Festival. Considered a contemporary Woodstock, the festival unfolds in the heart of the Western Carpathians. Having developed over the decades into an international artist settlement, Garana (50 km by car from Timisoara airport or 20 minutes from Resita train station) hosts Europe’s only open-air jazz festival, which commonly sees local hotels fully booked.

The 14th George Enescu International Competition, the only classical music competition organized by Romania to attain recognition within the international musical world, took place this year. It had four sections: violin, cello, piano and composition, and more than 230 young artists from 36 countries applied. Romania fielded ten participants in the violin contest, 14 pianists and two cellists. Audiences enjoyed free admission to concerts and recitals while the public could watch digital live screening in George Enescu Square.

RadiRo – Radio Orchestras International Festival took place at the end of September. A unique event in Europe, it brought to Bucharest five radio orchestras, along with internationally renowned soloists and conductors. oana.vasiliu@business-review.ro

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EVENTS 41

Premiere: La fille mal gardée ∫ OANA VASILIU Comic ballet La fille mal gardée (The Wayward Daughter) is the second premiere of the season at the Bucharest National Opera House. Local ballet aficionados will be treated to a turn

by Johan Kobborg, artistic director of the Ballet Company, in a travesti role, that of Widow Simone. The staging is the work of Swedish ballet master Malin Thoors and Danish choreographer and former first ballet dancer Kobborg.

“This is a show that I have staged many times before over many years, a ballet which I love, and I wanted to stage it in Romania to highlight the qualities of the dancers before the public,” said Kobborg. “La fille mal

gardée is one of those performances where the public leaves with big smiles on their faces, a quality that not all ballets have. Although we are talking about a comic ballet, the audience doesn’t always smile, which is why this production has something for every viewer. It’s a family show, especially for the young generations.”

La fille mal gardée is one of the most acclaimed works of British dancer and choreographer Frederick Ashton, inspired by his love of the countryside in Suffolk, Great Britain.

The ballet, which is in two acts and three scenes, is based on the 1789 painting of the same name by Jean Bercher Dauberval. oana.vasiliu@business-review.ro

Painter Adrian Ghenie named world’s bestselling young artist ∫ OANA VASILIU International art portal www.artnet.com has named Romanian painter Adrian Ghenie as the bestselling young contemporary artist in the world this year, topping a list of 50. According to the source, the art platform examined more than 18,000 living artists whose works have been put up for sale by auction houses in 2014, using as criteria the maximum difference in US dollars between a single lot’s high estimate and the sale price at auction and the average spread by this measure when all of the artist’s lots are taken as a group.

Ghenie came first on both criteria.

He achieved the maximum difference between the estimated price and the sale price for one painting, of USD 1.84 million, as well as the highest average difference for all his auctioned work in 2014, of USD 301,000, with ten paintings sold this year.

Ghenie’s highest valued painting was The Fake Rothko, which sold for GBP 1.42 million at an auction organised by Sotheby’s in London, in July this year. The painting had an esti-

mated price of USD 600,000. Furthermore, at the same auction house, he sold three paintings for a total of GBP 1.2 million in October. His artwork Duchamp’s Funeral I went for just over GBP 1 million, double the preauction evaluation.

In the latest report published by Artmark auction house in 2013, Ghenie is also the top Romanian artist presented in international auction houses, as his The King was sold by Sotheby’s in 2013 for EUR 212,000. He was also found to be the top Romanian artist for auctioned volume in international and national auctions over 2011-2013, with a total value of EUR 578,000.

Ghenie’s multilayered images reference a number of sources such as news, media, classic films and social media sites, often depicting figures that appear gnawed and slashed, blurred and speckled, explains www.artnet.com.

His work has been widely exhibited, including at Tate Liverpool, the San Francisco Museum of Modern Art and Fondazione Palazzo Strozzi in Florence. oana.vasiliu@business-review.ro

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42 CALENDAR

Cultural calendar 2015 January Concert Thomas Anders January 24, Sala Palatului

The former Modern Talking member will perform for a local audience hits such as You’re my Heart, You’re my Soul, Cheri, Cheri Lady, Sexy Sexy Lover, You are not Alone, No face, no Name, no Number, Brother Louie and many others. During his time with Modern Talking, he enjoyed countless global chart successes; Anders is subsequently one of the few German stars who can be said to have made both a national and international impact on the music scene. Tickets cost from RON 100 to RON 300 and can be bought from the Eventim network.

Cirque du Soleil – Quidam January 29 – February 1, Romexpo

Since its world premiere in Montreal in April 1996, the Quidam show has been seen by millions of people. It features over 45 top artists, acrobats, musicians, singers and actors. Cirque du Soleil says of the show, “Quidam: a nameless passer-by, a solitary figure lingering on a street corner, a person rushing past and swallowed by the crowd. It could be anyone, anybody.

Someone coming or going at the heart of our anonymous society. A member of the crowd, one of the silent majority.”

Tickets are available from www.evenim.ro and in Orange stores, with prices from RON 150 to RON 500.

February Opera premiere Falstaf February 19, Bucharest National Opera Giuseppe Verdi’s last opera returns to the Bucharest National Opera House after many years of absence from its repertoire. The director is Graham Vick, known for his original and experimental stage productions. Anyone curious about the style the Briton might bring to his local production can refer to the 1999 Falstaff he staged at the Royal Opera House Covent Garden, which drew inspiration from the paintings of Renaissance artist Pieter Bruegel, resulting in a mix of grotesque expression, balanced compositions and elementary colors. The three-act opera, which has a libretto

by Arrigo Boito and is inspired by William Shakespeare’s plays, will be performed in Italian and subtitled in Romanian.

March One World Romania One World Romania, Bucharest’s only documentary festival and the only one dedicated to human rights in Romania,

is now on its seventh run. Famed for tackling tough subjects, from Putin’s Russia to the legacy of Communism, the event grew out of One World in Prague, and was first organized by the Czech Centre Bucharest. Gradually the selection and organization became autonomous, and in 2009, the organizers of the festival started the One World Romania Association.

Jazz Night Out – Kurt Elling Passion World March 5, Radio Hall

For the first time in Romania, American jazzman Kurt Elling will present his Passion World project. Pianist Gary Versace, guitarist John McLean, bass player Clark Sommers and drummer Bryan Carter will join the Grammy award winner on stage.

Tickets cost from RON 85 to RON 145 and are available from the Eventim network.

Richard Clayderman – From Paris with Love March 26, Sala Palatului

Richard Clayderman returns to Romania for the fourth time with a world premiere: From Paris with Love. The iconic pianist will play some of his most famous works for two hours. Ballet and orchestral company Royal Camerata will accompany him.

Tickets, which cost from RON 95 to RON 400, are available from the Eventim network.

Marc Anthony March 31, Sala Palatului

The wait is over for Marc Anthony fans who were disappointed when the singer cancelled a Bucharest show scheduled for last May in response to the Ukraine crisis. The American will perform hits such as No Me Ames, I Need to Know, You Sang to Me, Rain Over Me and Tragedy on this, his world tour, Vivir Mi Vida. Anthony, formerly Mr. Jennifer Lopez, will also showcase his latest album, 3.0.

Tickets cost from RON 220 to RON 870 and are available from the Eventim network.

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April Next Film Festival Up to 30 short and medium-length films made by young and talented movie directors and sound designers from around the world will compete at the NexT awards. The event also serves as a meeting place for those who express themselves through film and love the medium.

Ballet triptych comprised of Classical Symphony, Pettite Mort and Marguerite and Armand April 25, Bucharest National Opera The Bucharest National Opera House premieres the choreography of some of the most popular artists of our time.

One performance brings together the work of Yuri Possokhov, Jiří Kylián and Sir Frederick Ashton, the promoters of a style that combines contemporary and academic dance, tapping into universal themes and elements of ballet.

The three compositions represent different approaches to the subject of love.

May Roxette May 17, Arenele Romane Because it must have been love, Rox-

ette are returning to Romania. In a nearly 25-year career, the Swedish pop duo has sold 75 million albums spawning over 30 hits. Top tunes include The Look, Listen to Your Heart, Dangerous, It Must Have Been Love and Joyride.

Tickets are priced between RON 145 to RON 295 and can be bought from www.myticket.ro.

Opera premiere: Manon Lescaut May 23, Bucharest National Opera Director Jonathan Kent and set designer Paul Brown have transposed the Abbé Prévost story – the source material for the opera’s libretto – to the licentious modern world. This new production, which premiered in 2014 at Covent Garden, in London, takes a

CALENDAR 43 fresh approach to the character of Manon, who falls victim to the consumerism and media obsession of today’s world.

Transylvania International Film Festival May 29 – June 7, Cluj-Napoca, several venues Founded in 2002, TIFF has grown rapidly to become the biggest film-related event in Romania and a major regional cultural landmark. The festival presents innovative and striking films with a focus on originality, independence of expression and trends in youth culture. TIFF is part of the line-up that makes the vibrant city of Cluj-Napoca a perfect candidate for European Cultural Capital 2021. Submissions for TIFF 2015 are now open.

June One Republic June 4, Arenele Romane One of the most successful alternative rock bands in recent years, One Republic is coming to Romania for the first time. Singer/songwriter Ryan Tedder and his bandmates will perform here as part of their tour to promote the US group’s latest album, Na-

September George Enescu International Festival August 30 - September 20, Palace Grand Hall, Romanian Atheneum

the festival and to Romania for the first time, after 15 years of negotiations, accompanied by the conductor Sir Simon Rattle.

The London Philharmonic Orchestra, Vienna Philharmonic, Royal Concertgebouw Orchestra Amsterdam, San Francisco Symphony, Munich Opera Orchestra, Staatskapelle Dresden, Sankt Petersburg Orchestra, Vienna Philharmonic, Bayerische Staatoper, Royal Liverpool Symphony Orchestra and Monte Carlo Philharmonic will all perform, along with the local National Youth Orchestra, George Enescu Choir and Orchestra Philharmonic, Radio Hall National Orchestra and Radio Academic Choir.

Soloists include: conductors Cristian Mandeal and Horia Andreescu, Dan Grigore, Ruxandra Donose, Valentina Nafornita, Alexandra Dariescu, Arcadi Volodos, Anne Sophie Mutter, Fazil Say, Murray Perahia, Yfrem Bronfman, Andras Schiff, Pierre Laurent Aimard, Maria Joao Pires, Renaud and Gautier Capucon, David Garett, as well as garlanded musicians from the Enescu Competition, Alexandru Tomescu, Valery Sokolov, Stefan Tarara, Vlad Stanculeasca and Elisabeth Leonskaja. The full program

Over 2,500 foreign artists and 500 national musicians are expected to take part in 58 concerts during the 2015 George Enescu Festival. The Berlin Philharmonic Orchestra will come to

of the festival can be found here.

The Romanian Ministry of Culture will contribute RON 28 million to the budget, with another RON 7 million coming from private sponsors.

formed by the Royal New Zealand Ballet.

Sibiu International Theatre Festival June 12 – 21, Sibiu, several venues Now on its 22nd run, the event – the biggest annual festival of performing arts in Romania – is a platform for the debating of ideas and the cultures of the participating countries. The tenday festival typically sees participants from around 70 countries staging some 300 events. The European Commission has declared it “the third most important performing arts festival”, after long established events in Edinburgh and Avignon. Submissions have closed, but no information about the 2015 lineup had been made public by the time BR went to press.

Tickets are on sale from the Theatre Agency in Sibiu, the national networks of Domo, Germanos, Orange and Vodafone stores, Humanitas and Cărtureşti bookshops and online at www.eventim.ro.

tive, which includes singles Counting Stars, Feel Again and I Lived. The set list will likely include hits from previous albums such as Apologize, Stop and Stare, Secrets, Good Life and Marching on.

Tickets are available on myticket.ro and range from RON 120 to RON 235.

Ballet premiere: Giselle June 6, Bucharest National Opera During the 2014-2015 season, the Bucharest National Opera will showcase a new staging of this romantic ballet, created by choreographers Johan Kobborg, artistic director of the Romanian National Ballet, and Ethan Stiefel. The version was largely acclaimed on its premiere, in New Zealand in 2012, when it was per-

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44 FILM

Big box office: the ten highest-grossing local movies this year From Hollywood style comedies to black-and-white dissections of Communism, the 14 Romanian productions and co-productions that made it to the national silver screen this year were a mixed bag. But which got the most bums on seats? BR brings you the lowdown on the ten highest-grossing Romanian films this year. ∫ OANA VASILIU

#Selfie

Premiered: 09.05.2014 Weeks on screen: 24 Viewers: 101.726 Box office: RON 1.145.987,00 Director: Cristina Iacob Starring: Olimpia Melinte, Vlad Logigan, Levent Sali, Flavia Hojda, Crina Semciuc, Alexandru Calin

Synopsis: Instead of staying home and revising for their finals, three students – Roxi, Ana and Yasmine – head to the seaside for one last reckless hurrah before their big exams.

They’re looking for love, excitement and adventure – but will the boys they encounter be able to provide it?

Closer to the Moon Premiered: 07.03.2014 Weeks on screen: 23 Viewers: 20.135 Box office: RON 368.332,98 Director: Nae Caranfil Starring: Vera Farmiga, Mark Strong, Tim Plester

Cuscrii / The In-Laws Premiered: 24.10.2014 Weeks on screen: 6 Viewers: 23.305 Box office: RON 426.273,00 Director: Radu Potcoava Starring: Paul Ipate, Ioana Blaj, Mircea Diaconu, Luminita Gheorghiu, Marian Ralea

Synopsis: Romania’s answer to Meet the Parents brings a local twist: a denouement that plays on the 1989 Revolution. Ionut and Mariana are engaged, and bringing their future in-laws together for the first time. As usual, things do not go smoothly.

His low-key parents are intimidated by her folks’ greater wealth and ostentatious “McMansion”, his father lays into the brandy and her sisters are seething with their own dysfunction. Then history begins to reveal itself…

Synopsis: The film is the true account of a group of high-ranking Jewish members of the nomenclature, who, in 1959, staged what was to become known as the coup of the century: they robbed Romania’s National Bank, making it look like a film shoot. And this is only the beginning. Once arrested and prosecuted, they were forced to reenact their parts in the heist for a propaganda movie. Despite its tragic aspect, this incredible story, long shrouded in mystery, gets an unexpectedly light treatment.

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FILM 45

America, venim / America, Here We Come

Bucuresti, unde esti? / Bucharest, Where are You?

Premiered: 19.09.2014 Weeks on screen: 8 Viewers: 28.081 Box office: RON 327.269,26 Director: Razvan Savescu Starring: Mihai Calin, Gheorghe Ifrim, Adrian Vancica, Mira Furlan

Premiered: 13.06.2014 Weeks on screen: 6 Viewers: 3.643 Box office: RON 11.922,21 Director: Vlad Petri Synopsis: Over 23 years since the Romanian Revolution, the people were back on the streets of Bucharest, reclaiming the public space and fighting to change the political system. Director Vlad Petri followed their stories for a year, from the first days of the protests to the referendum to remove

Synopsis: Five actors, a director and a small child with a huge teddy bear are crossing the ocean from Targoviste to perform in New York. To make some extra money, the actors decide to start working with a local agent, a Romanian living in the US. The agent promises them a major tour, but nothing goes according to plan…

Kyra Kyralina

Premiered: 05.09.2014 Weeks on screen: 9 Viewers: 6.447 Box office: RON 64.155,93 Director: Dan Pita Starring: Iulia Dumitru, Stefan Iancu, Corneliu Ulici, Iulia Cirstea Synopsis: This baroque production reconstructs the life of a dysfunctional 1920s family, with impressive interiors, costumes (Oana Paunescu) and music (Adrian Enescu). Based loosely on the plot of the homonymous book by Panait Istrati, it is pitched as a set of interlocking narratives concerning a young gay man in the latter years of the Ottoman Empire, a time that was somewhat more liberal sexually. But the movie is really a family story seen through the eyes of the young man, focusing on two female characters. It concentrates on the search for love and happiness in a world of fear, revenge and excess.

Q.E.D.

Premiered: 10.10.2014 Weeks on screen: 5 Viewers: 4.778 Box office: RON 34.119,09 Director: Andrei Gruzsniczki Starring: Ofelia Popii, Sorin Leoveanu, Florin Piersic Jr.

Synopsis: This black-and-white movie focuses on a mathematician’s decision to publish a paper in a magazine edited by an American university without asking permission from the communist authorities.

This action triggers a chain of events that will change the lives of his friends.

the president, crafting them into a documentary about the people transforming a revolution into a travesty.

Love bus: cinci povesti de dragoste din Bucuresti / Love bus: Five Love Stories from Bucharest Premiered: 22.08.2014 Weeks on screen: 8 Viewers: 1.789 Box office: RON 7.995,69 Directors: Roxana Andrei, Mihai Mincan, Constantin Radu Vasile, Andrei Georgescu, Florin Babei Starring: Ada Gales, Catalin Jugravu, Andrei Ion Synopsis: The titles of the five shorts are well-known Bucharest neighborhoods, and each work starts with images from the respective areas of the city.

Scurt / 4: Istorii de inima neagra / Black Heart Tales

Premiered: 28.11.2014 Weeks on screen: 1 Viewers: 1.889 Box office: RON 6.407,09 Directors: Luiza Parvu, Radu Jude, Andrei Cretulescu, Iulia Rugina Starring: Ada Gales, Catalin Jugravu, Andrei Ion

Synopsis: Gangsters, drinking, death, power ballads, witchy neighbors, screaming neighbors, neighbors impersonating rabbits, and transatlantic treks – it’s all there in this new batch of Romanian shorts. oana.vasiliu@business-review.ro

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46 FILM FILM REVIEW

Paddington DEBBIE STOWE Director: Paul King Starring: Hugh Bonneville, Sally Hawkins, Julie Walters, Jim Broadbent, Peter Capaldi, Nicole Kidman, Ben Whishaw On at: Grand Cinema & More, Hollywood Multiplex, Movieplex Cinema Plaza, Cine Grand Titan, Cinema City Cotroceni, Cinema City Sun Plaza, The Light Cinema, Glendale Studio, Caffe Cinema 3D Patria, Patria Films based on popular children’s books can be a license to print money: see Harry Potter, Twilight, Hunger Games, etc. But Paddington is a different kettle of fish (or jar of marmalade for the initiated): while the bear – who appeared in stories by English author Michael Bond in the 1960s and 1970s – is much loved in the UK, he doesn’t enjoy the global renown of, say, a Harry Potter.

On top of this, a misconceived adaptation risks alienating the adults who take their kids, many of whom fondly (and protectively) recall Paddington tales from their childhood.

Happily, the movie has avoided these pitfalls: it’s a lovely story, brimming with wit and warmth, faithful enough to the source material to please fans, but fully accessible to anyone encountering the furry hero for the first time.

When circumstances force him to leave his native Peru, young Paddington (perfectly voiced by Ben Whishaw) embarks upon a journey to London, following up on a longstanding invitation. Unable immediately to find his contact, the bear

Bear necessities: Sally Hawkins and Jim Broadbent take afternoon tea

makes a temporary home with the upper middle-class Brown family. Although stern patriarch Mr. Brown (Downton Abbey’s Hugh Bonneville), a stuffy risk analyst, has misgivings about housing a wild animal in the family home, Mrs. Brown (Sally Hawkins) prevails upon him to let Paddington stay for a while – she’s a children’s book illustrator so we know she’s got soul.

Fans of UK children’s films will recognize the template of a quirky outsider helping an austere

Book value: Paddington appeared in children’s stories from 1958

London financial professional to bond with his family from Mary Poppins. And Paddington does not suffer from comparison with that enduring classic: this is a truly delightful film that appeals on multiple levels.

Children will love the slapstick comedy that ensues when our hapless hero attempts to master the intricacies of urban plumbing, or negotiate London streets and public transport.

There are witty sight gags (including some wry wordplay on the side of a

van) and a disguise that verges on the risqué.

But the biggest laughs of an excellent script are reserved for the grownups. Observational humor about parenthood, jokes about insurance and insider trading and a nicely nailed skit on London cabbies – all of this will go flying over young heads straight to the adults in the audience.

On the more serious side, the movie sends a heartwarming message about individuality, kindness, acceptance and belonging. It’s also a huge advert for London.

But any moralizing or marketing is done with such charm that you’ll forgive it.

The cast is superb, from Bonneville and Hawkins as the Browns, and the ever fabulous Julie Walters as their housekeeper Mrs. Bird, to Nicole Kidman and current Doctor Who Peter Capaldi as the schemers providing the peril. Old guard British A-listers Jim Broadbent, Michael Gambon and Imelda Staunton (it could be a Harry Potter reunion) provide solid support.

Whether you’re a cub or an old grizzly, a Paddington aficionado or entirely new to the ursine adventurer, this is an irresistible gem of a movie, a piece of bear-faced brilliance. debbie.stowe@business-review.ro