Private Equity 2021 Guide: Trends and Developments in Latvia

Source: Chambers Private Equity 2021 Guide

“The global economic developments in 2020 had significant effects in Latvia, much like in every country. The COVID-19 pandemic impacted the private M&A market in Latvia, among others. All economic activity reduced, with the Bank of Latvia reporting a drop of 2.3% in gross domestic product in the first quarter of 2020 and a staggering 7.1% drop in the second quarter of 2020, as multiple businesses were brought to a halt due to activities to combat the pandemic. Industries such as food services and hotels (HoReCa), tourism, airlines and gaming were hit quite hard due to the mobility restrictions that were put in place for the majority of 2020 in Latvia.

Despite the uncertainties and challenges posed by local and global economic developments, the private equity market remained active during the pandemic. Interest rates for financing remained relatively low and there was capital available in the market in 2020. In fact, according to the data published by the Latvian Private Equity and Venture Capital Association, amounts invested in Latvian companies in 2020 increased compared to investments in 2019. The number of overall private equity transactions in Latvia, however, faced a slight decline. Deal value growth in 2020 was mainly influenced by a large investment made in 2020 by INVL Baltic Sea Growth Fund into Eco Baltia.

There was also a significant increase in the number of divestments in 2020, a trend which may be fuelled by the uncertainties and volatility of the market.

The private equity market is still developing and although the number of investments decreased slightly in 2020 as compared to 2019, which is mainly attributable to the pandemic, it still remained at a high level, compared with the overall market activity in previous years.”

 

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Chambers Global Practice Guides provide clients with expert legal commentary on the main practice areas in key jurisdictions around the world. Written with clients in mind - both in-house lawyers and senior management - they enable the business client to identify and compare current legal issues across jurisdictions in a range of business-critical practice areas.

The new Private Equity 2021 guide features 35 jurisdictions. The guide provides the latest legal information on mergers and acquisitions; due diligence; the structure of transactions; terms of acquisition documentation; public-to-private takeovers; mandatory offer thresholds; hostile takeover offers; management incentives; shareholder oversight and liability; and exits, including by an initial public offering (IPO).