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Emerging Europe: Lazard seeks top advisory spot in CEE

Serbia’s ex-finance minister leads charge; sovereign restructurings ‘can open doors’.

Lazard is ramping up its emerging Europe coverage and aims to become the top advisory-only house in the region, its new regional head tells Euromoney. 



Bozidar Djelic says the US firm is increasing its commitment to central and eastern Europe despite rising political risk and declining dealflow across the region. “There are significant challenges in CEE at present and many of our competitors are reducing the resources dedicated to the region,” he says. “We are doing the opposite. We have decided now is the time to make sure that Lazard has the leading franchise in the region, of the same quality that we do in other parts of the world.”

Over the past decade, Lazard has been successful in public sector advisory in CEE – most notably in Kazakhstan, where it was mandated on the restructurings of failed lenders BTA Bank and Alliance Bank – but it has been less active in private sector transactions.

It previously managed its emerging Europe M&A coverage through a joint venture with the investment banking arm of Raiffeisen Bank International (RBI) set up before the financial crisis. Lazard has reorganized its regional coverage and ended that arrangement but it has retained some of the Austrian bank’s leading lights as consultants, including Martin Schwedler, former head of M&A at RBI, and Herbert Stepic, the legendary architect of Raiffeisen’s CEE expansion, who resigned in 2013 over questions about property dealing in Asia. 


Lazard’s choice of Djelic to head its revamped regional division also shows its preference for prominent personalities. 

The former McKinsey employee has served two terms in government in Serbia, as finance and economy minister from 2001 to 2004 and as deputy prime minister for four years until 2011, with a stint in between as director for CEE at Crédit Agricole. 

He joined Lazard’s sovereign advisory group in January 2014 and was given responsibility for CEE in March last year.

Djelic is confident that Lazard can leverage its public sector expertise to expand its franchise in the region. “We believe that covering sovereign advisory work, as well as classic M&A and restructuring, gives us a competitive advantage, particularly in countries where the state is a major player in the economy,” he says.

He cites the example of Lazard’s work on Ukraine’s debt restructuring, which he says makes the firm “well-qualified” to undertake similar mandates in the private sector. 

The Ukrainian government picked Lazard in January 2015 as its exclusive financial adviser on the restructuring of $18 billion of sovereign debt, an operation that was successfully completed in November when bondholders agreed to accept a 20% nominal haircut and maturity extensions in return for warrants linked to Ukraine’s economic growth. 

Lazard was also sole adviser on external debt restructurings for Ukrainian state-owned banks Ukreximbank and Oschadbank. 


Other notable recent public-sector mandates have included the Slovenian government’s sale of Nova KBM, the country’s second-largest bank, and the privatization of Serbia’s Telekom Srbija. The former was successfully concluded in June, when the lender was sold to Apollo Global Management and the European Bank for Reconstruction and Development (EBRD) for €250 million. The Telekom Srbija sale proved more challenging and was cancelled at the last minute in December, reportedly due to unrealistic price expectations and in-fighting among local policymakers.

In the private sector, Lazard’s highest-profile mandate in recent years was asadviser to KKR on its €1 billion acquisition of Balkan pay-TV and broadband provider SBB/Telemach from regional private equity fund Mid Europa. 

Deals of this size are rare in CEE, however, and Djelic says Lazard is happy to pursue more mid-market opportunities. “Smaller deals can be worth doing, particularly if they mark the start of a regional consolidation,” he says. “Even smaller countries can produce interesting clients with regional or global ambitions. One of our objectives in CEE is to identify companies that will be regional leaders in future.” 


While acknowledging that returns are better in bigger markets and on bigger deals, Djelic insists this is “not enough to create a regional strategy. 

“To build up our franchise we need to work on the most complex and challenging transactions in the region with the most advanced and dynamic groups and entrepreneurs,” he says. “If we can achieve that then the economics will follow, but we are not putting the economics first.” 

He adds that Polish companies, in particular, are well-placed to increase their regional footprint. 

“Most Polish groups may not have the muscle to make big western acquisitions but there are good opportunities for both financial institutions and corporates to leverage their experience and expertise to expand within CEE,” he says.

One area where Djelic sees fewer opportunities for Lazard in CEE is in equity capital markets advisory. As he notes, equity valuations in the region are “definitely not at levels that entrepreneurs would want to list at, as a result of which many IPO proposals have been shelved”.