Russians and Vulture Funds Main Buyers of Businesses in Bulgaria

Russians and vulture funds listed on the US and London stock exchange are the main buyers of troubled Bulgarian companies, said Nikola Stoyanov, managing director of Bulgarian portal www.businessforsale.bg. The portal is owned by property company BULGARIAN PROPERTIES.

Russian buyers are mostly shopping for light industry companies and hotels. They are looking for textile and furniture plants to move their production to and export to the EU, Stoyanov explained. Deals have already been done with Russian investors.

Vulture funds are mostly interested in stressed assets, applying aggressive methods to buy at enormously undervalued prices, Nikola Stoyanov comments. Instead of paying cash, they usually opt for paying off banking debts and offering the owner a premium in the form of shares in the fund that could be sold on the stock exchange. The main focus is the hotel industry, which was hurt severely by the economic crisis.

This type of investors is interested in the hotel business where one will find a number of distressed projects. There are a total of 44 hotel offers published on the site. The highest price of 15.9 million Euro is sought for a functioning hotel close to the beach in Sozopol. However, up to now the company has not stricken a deal with such a fund the main reason being that Bulgarian businessmen are not ready to sell their property without receiving the money in cash, Stoyanov commented.

In the beginning of the crisis there were companies from the UAE interested in casinos, 5-star hotels and bars and restaurants but no deals were concluded, Nikola Stoyanov said. He added that there is interest in companies dealing in the field of medicine which are being bought by strategic investors expanding their portfolio.

The bulk of the buyers are looking for renewable energy companies but there is no supply to meet that demand. According to Stoyanov, the Bulgarian clean energy sector has huge growth potential, having a long way to go before it hits its 16% target by 2020. Holiday property investors have also shifted their focus to the lucrative sector, seeking to snap wind farms and photovoltaic (PC) production capacities.

Manipulating the financial reports of the company with the aim of evading taxes and payment of benefits is the main mistake of Bulgarian businessmen, Stoyanov noted. He added that before buying a company foreign investors want additional information whether it has evaded taxes and whether its owners have a criminal record. In case there is anything suspicious they do not go for the deal.

At the moment www.businessforsale.bg has about 200 offers for sale of businesses. However, part of the sellers do not want to make the sale public and their offers are not published in Internet, Nikola Stoyanov said. Some of the offers on the site include an operating alcohol factory near the town of Zlatitsa for 320,000 Euro, farms near the Danube town of Vidin for 8,500 and 15,000 euro, a poultry farm near the town of Pleven for 2 million Euro and a plastic surgery clinic in the center of Pleven for 1 million Euro.

www.BusinessForSale.BG

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