A number of deals, either mergers or acquisitions, reconfigured the local construction sector put at EUR9 billion to EUR10 billion a year. The year’s biggest challenge was the significant drop of investment, especially of public spending, causing an over 10% decline of construction works in the first three quarters.
Hidroconstructia takes out first loan from a syndicate including an insurance company in Romania
Hidroconstructia, one of the largest builders in the country, took out a EUR60 million loan from a syndicate consisting of BRD-Groupe Societe Generale and insurer Allianz-Tiriac Asigurari. This was the first time when an insurer joined was involved in a syndicated loan in Romania.
The loan will go towards the working capital of Hidroconstructia and allows it to get letters of guarantee for the contracts it signs.
Germans buying Germans: VEKA takes over Gealan
German PVC trim manufacturer VEKA acquired the European operations of Gealan in one of the biggest deals in the construction sector in the past year.
The deal includes the subsidiary in Romania, where both companies operate. Unlike Gealan, which has a plant in this country, VEKA only imports products from its plants in Europe.
Gealan and VEKA will continue to operate as separate brands in the future.
Piritex goes bankrupt
Prahova-based importer and distributor of interior decoration materials Piritex, owned by Romanian businessman Petrica Usurelu, went bankrupt at the beginning of the year. The company posted 146 million lei (EUR33 million) revenue in 2010, almost half the 2008 level, according to the latest available data.
Piritex revenue started to shrink in 2009, when it posted an over 25% decline to RON270 million. Under the circumstances, Piritex laid off more than 450 employees from 2008 through the end of 2010, when it had 195 left.
Lafarge and Holcim merge. The former sells local plants
Swiss-held Holcim is preparing for the international merger with French-held Lafarge, and the deal will also include the subsidiaries the two groups have in Romania.
To be able to go ahead with the merger plan, they will have to sell some of their assets. In Romania this means Lafarge assets will have to go or else the new entity would become dominant, with an over 50% share of the cement market valued at EUR500 million to EUR600 million a year. Lafarge’s most important assets in Romania are its two cement plants in Medgidia (Constanta County) and Hoghiz (Brasov), as well as the grinding station in Targu-Jiu.
Ceramica Iasi, the first local investment of an Asian investment manager
Investment manager Asia Debt Management Capital (ADM Capital) based in Hong Kong bought 85% in brick maker Ceramica from US private equity firm Advent in midyear.
This is its first Romanian investment. ADM Capital has offices in London, Kiev, Istanbul, Almaty (Kazakhstan), Mumbai, Beijing and Hong Kong and manages a $1.4 billion portfolio. ADM is the first Asia-based investment manager entering Romania. Ceramica has a plant in Iasi and posted RON72.2 million revenue last year, according to Finance Ministry data.
Major builders go insolvent
The slashing of public and private investment in the crisis years drove the construction sector to the brink of collapse, forcing many companies to file for insolvency over the past few years.
In some cases, it was not the decline in the number of projects only but also the corruption cases in connection to their owners that caused the companies’ default.
The latest such example of is Bucharest-based builder Tehnologica Radion, of Theodor Berna. The businessman was remanded on custody in a EUR100 million tax evasion and money laundering case.
The company posted EUR81 million revenue last year. Vega 93, the largest construction company in Galati, too, went insolvent this year. Vega 93 posted EUR59 million revenue in 2013.
Acquisition of Europrefabricate plants by Somaco
Somaco Grup held by Swedish private equity firm Oresa Ventures invested EUR8 million in the acquisition of Europrefabricate plants in Timisoara and Targoviste and in the expansion to the west of the country. Europrefabricate was indirectly owned by Italian investors. Somaco Grup Prefabricate posted EUR21.8 million revenue last year.
Ruukki closes EUR35 million plant
Ruukki Romania, part of the Finnish metallic construction products Ruukki Construction, will end production of the plant in Bolintin-Deal near Bucharest this winter, which it opened in 2008 in an over EUR35 million investment.
The closing will leave 110 employees without a job and came after Rautaruukki, the group that included Ruukki Romania until this year merged with Sweden’s SSAB group in 2014. The new group decided to focus only on metallic roofing, while Ruukki used to make a greater variety of products in Romania.
Do-it-yourself market still busy
The year 2014 is probably the most hectic of the 12-year history of the local do-it-yourself sector, with two important deals involving 42 stores, an exit where the ‘70% off’ final sale shook the prices on the market, investments of more than EUR60 million in new stores and the emergence of a new brand and concept – Brico Depot, which replaced the Bricostore stores.
Those that sold their stores were Praktiker (27 stores) and BauMax (15 stores), while OBI left with tail between its legs, closing all its stores in Romania with a final clearance sale that lasted about a month.
Bacau-based Dedeman, French-held Leroy Merlin and the new Praktiker owner, Omer Susli, opened new stores.
Policolor moves plant from eastern to western Bucharest
Policolor announced it would sell to real estate developers Robertino Georgescu and Dan Dragulin its site on Theodor Pallady Boulevard in eastern Bucharest.
The company was to relocate its production facilities and administrative operations to the west of the city. Policolor, a paint maker held by Reconstruction Capital 2, Romanian Investment Fund and Romanian Reconstruction, expressed intent to move from the Theodor Pallady site, where it owned almost 14 hectares of land, as early as last year.
(English version by Loredana Fratila-Cristescu)