IFLR 1000
The Guide to the World's Leading Financial Law Firms

The public-private partnership (PPP) is becoming an increasingly popular way to finance infrastructure projects in the Slovak Republic. The success of the D1 motorway, built using a public-private partnerhship (PPP), is one reason for this....

The public-private partnership (PPP) is becoming an increasingly popular way to finance infrastructure projects in the Slovak Republic. The success of the D1 motorway, built using a public-private partnerhship (PPP), is one reason for this. The second is simple: "Slovakia needs infrastructure," says one partner. "The finance for projects will come from PPPs, as the government does not have the funds." More road building projects are in the pipeline, along with some power plants.

As has been the effect in nearly every financial market, lending is down significantly in the wake of the economic downturn. Real-estate financing and acquisition finance were active a year ago, but this has stopped due to a lack of liquidity in the market. Now the majority of the work is refinancing and restructuring deals, with banks looking to add more complex securities. Export finance is one growth area, with deals to countries like Russia and Ukraine prevalent.

Slovakia reached a significant milestone when it adopted the euro on January 1 2009. So far, the reaction has been positive. "The introduction of the euro has shielded Slovakia from the problems that central and eastern Europe countries like Hungary have had," says one partner, referring to the currency fluctuations experienced by some in the region.

Capital markets work has never been a big industry in the country, and given the shutdown of international markets that was unlikely to change. "Capital markets remain underdeveloped," says one partner. The small size of the country added to the low level of liquidity is two reasons for this.

Finally, the departure of international firms from the legal market continues, with Freshfields Bruckhaus Deringer leaving the Slovak Republic in 2009. This is part of a wider retrenchment of the firm from central and eastern European countries. However, Bird & Bird has stemmed the outward flow by arriving in 2009.

Pure mergers and acquisition activity work is thin on the ground in Slovakia. In a similar vein to most of Europe, this is due a combination of a lack of liquidity, investor caution, and the M&A mantra for 2009 – sellers need to be more realistic with their price....

Pure mergers and acquisition activity work is thin on the ground in Slovakia. In a similar vein to most of Europe, this is due a combination of a lack of liquidity, investor caution, and the M&A mantra for 2009 – sellers need to be more realistic with their price.

The market is so tough that one partner believes its firm is acting at 20% of the capacity on the previous year. Another was dismayed to see a deal involving a multinational corporation collapse after signing: "I've never seen this before," notes the partner

Unsurprisingly, the boom in real-estate M&A activity has disappeared. What Slovakia is experiencing is a cull of international and local companies' bases in the country. Many are looking to dispose of their operations. The departure of Linklaters and Freshfields Bruckhaus Deringer is a pertinent example of this.

Another form of work is through mergers between companies to keep their entities alive. Finally, the sale of distressed assets has started and is expected to accelerate in October, with banks predicted to become more proactive from that point forward. Restructuring work is also coming to the fore.