Strong M&A trends, developing market sectors, and a surprisingly booming economy is what Austria is buzzing about, according to PHH Partner Rainer Kaspar.
“The dip in the M&A market that was present at the beginning of the pandemic has completely disappeared,” begins Kaspar. He reports that the Austrian market has experienced a record year in 2021 and that there is a massive growth trend currently. “It has been quite crazy, across the board, and not even the recent political ups and downs have impacted this,” he says. “The markets have been steadily advancing.”
According to him, companies that have been pulling out less than 24 months ago are now pouring money into the market and acquiring assets. Additionally, he reports that the legislative landscape has remained mostly unchanged, which could be a factor of such steady business development. “The latest material changes to the legal landscape have been the updated FDI rules – but these are old by now,” he says. “There might have been some obstacles that these rules presented – but only time-wise due to the novelty of the law and nature of the notification procedure and it taking a few weeks to complete. The possibility of banning an investment on these grounds has not impacted the market virtually at all.”
Also, Kaspar reports that the merger control framework has been updated somewhat. “The previous wording of the law has provided for a rather low threshold for merger control notification requirements. The updates offered a more focused approach to merger control clearance and competition impediments. Further, more power was given to the competition authorities,” he says.
As for the economy itself, Kaspar says that it is recovering greatly from the brief COVID 19-induced recession pointing to healthcare and IT. “A lot of investor attention has been placed on these two sectors and they have indeed boomed.” Further, he says that he sees the trend of large industrial players divesting non-core assets continuing.
Moreover, Kaspar reports that Austria experienced a high volume of VC transactions lately. “We already have two or three startups that have reached unicorn status and I think that this trend will continue well into 2022."
Part of the reason why Kaspar believes Austria is such an attractive investment destination is its interests. “While the US FED has recently announced an interest rate increase in an effort to respond to the inflation, this is not something EU countries have done yet and, because this inflation wave has not hit Austria, there is still a lot of cheap money on the market which acts as a perfect catalyst for M&A transactions.” Finally, Kaspar reports that there is a steady trend of an increase in insurance usage in transactions which “only serves to show that Austria is a market of major interest for investors.”