The BRIC countries are supposed to be synonymous with growth, and the rapid rise of M&A deals over the past five years is evidence of this. However, it seems that this growth is slowing and Russia in particular is letting the side down.
So far this year, BRIC targeted M&A volume is down by 10% to $272.8bn, according to new figures from Dealogic. This doesn’t sound too bad, but the number of deals has slumped by more than 1,000 in 2012, to 6,036. This was led by a drop in Russia and China.
Deal volume in Russia has fallen to $45.8bn, or an 18% decline on last year. More disconcertingly, as the chart below shows, M&A activity in the BRIC countries appears to have peak in 2009.
It’s not just volume in Russia that has slumped; fees being paid to investment banks have declined significantly. As another depressing chart illustrates, M&A revenue in Russia has slipped by a massive 46% to $130m this year.
Are the BRIC countries just a slowly fading pipedream? Maybe not, but more needs to be done to develop the infrastructure in Russia if big ticket M&A and capital markets deals are to thrive.
For example, the IPO of MegaFon, which could be worth up to $4bn, is being dual-listed in London and Moscow, which suggests the latter lacks a little depth.
What’s more, local banks need to start making all those new hires pay. Despite building their investment banking teams this year, Goldman Sachs, Citi and Credit Suisse still dominate the league tables, suggest Dealogic.