Eastern Europe opening up to Iberia

Iberian investors continue to seek out and find opportunities across Central and Eastern Europe, with many utilising Romania and Poland as regional gateways, say Paulo Alexandre Matinha and Alexandra Pereira dos Reis in the newly opened Bucharest and Warsaw offices of Raposo Bernardo.

Central and Eastern Europe remains a region of growing interest for Iberian investors, as they seek to capitalise on the scale of the region’s economies and the modernisation programmes enacted by both the European Union (EU) and national governments, they say.

“Across Central and Eastern Europe we are seeing continuing flows of investment, but among Iberian investors to date there has been a clear emphasis on real estate from private equity funds, as well as in tourism and leisure, and infrastructure developments,” says Paulo Alexandre Matinha, the Romanian country manager. “We have also seen growing interest among local finance groups to participate in projects supported by Iberian banks.”

New projects are in development across the region, which some suggest are more economically attractive than those across Iberia, but governments are also beginning to implement tax and other incentives in specific regions, and there is growing interest in renewable energy schemes, as well as in developing telecoms networks, they say.

In addition, events such as the joint-hosting of the 2010 European Football Championships by Poland and Ukraine, are also driving particular types of opportunities, says Alexandra Pereira dos Reis, country manager for Poland.

“These countries’ exports clearly do not stop at the EU border and we are also now seeing flows towards Africa and Latin America markets using Portugal and Spain as a platform to reach them.” Alexandra Pereira dos Reis, Raposo Bernardo, Warsaw

El centro y el este de
Europa continíºan
manteniendo el
interés para la
inversión proveniente
de la Pení­nsula
Ibérica, a la cual
también atraen las
oportunidades que
presentan los
miembros más
recientes de la UE
que buscan
modernizar sus
economí­as y sus
apuntan Paulo
Alexandre Martinha y
Alexandra Pereira dos
Reis, de Raposo
Bernardo &
Comentan que el
continuo flujo de
fondos estructurales
de cohesión,
particularmente en
Polonia y Rumaní­a,
se suma a la lista de
beneficios que estos
paí­ses ofrecen como
puerta de entrada a
la región.

“These markets offer new opportunities for investors who are perhaps experiencing slowing domestic growth. Poland is clearly among the most mature markets in the region, with a longer history of foreign investment, but Romania has one of the fastest economic growth rates across the entire EU. Both countries offer stable and solid economic and political environments in which to do businesses, and which welcome foreign investment rather than seek to protect against it.”

As relatively new EU states the countries have had to modernise and harmonise their domestic legislation and so offer a legal and regulatory environment equal to any in Europe in terms of labour, fiscal and commercial codes.

“The fiscal systems of both Poland and Romania offer low tax rates and modern legislative codes. But in addition, the EU has established cohesion and structural investment fund programmes for both countries which present clear opportunities,” adds Paulo Alexandre Matinha.

For Romania, current programs run from 1 January 2007 to 31 December 2013, with a €54.4 billion Structural Fund budget and an €18bn Cohesion Fund, while the EU has established funds for Poland totaling €60bn.

Investment flows

The flow of interest and goods is no longer purely towards the region, but also through it, they add. Poland and Romania are established as agricultural exporters, and as markets producing finished or semi-finished goods for export across the EU, including notably in the automotive sector.

Poland borders seven countries, and connects Western Europe with the Baltic states, as well as Ukraine and Belarus, while Romania also connects to the Ukraine, as well as providing an EU entry route into the Balkans and Turkey.

“These countries’ exports clearly do not stop at the EU border and we are also now seeing flows towards Africa and Latin America markets using Portugal and Spain as a platform to reach them. Flows are not always in a straight line and we see many operators now utilising ‘cobweb’ expansion models,” says Pereira dos Reis.

In any event, they say they are now seeing two types of investor interest, newcomers and those looking to further expand their operations in the region, neither of which presents specific practical problems, they insist.

“The ability to connect locally, to have an understanding of local and regional cultural and administrative issues and to overcome them is clearly important. But on a day-to-day level the countries’ membership of the EU obviously reduces or even eliminates the practical personal problems usually associated with visas, permits or operating licences,” says Alexandre Matinha.