Introduction

At present, the Norwegian economy is experiencing a noticeable slowdown. Unemployment is still at a relatively low level historically. So far this year, the policy rate has been raised by 1.5 percentage points and is now at 4.25 per cent. Inflation measured by the consumer price index (CPI) has fallen after peaking in October last year and is at 3.3 per cent from September 2022 to September 2023. The factors that contributed to higher inflation have now reversed – electricity prices have fallen, the weakening of the Norwegian currency “krone” seems to have stopped, and international inflation is on the decline. This suggests that the peak of the policy rate is near, according to Statistics Norway. Despite this, Norwegian households are significantly impacted by the rising interest rates. This is largely due to the fact that most mortgages traditionally have variable interest rates, and Norwegian households have a high debt ratio in percentage terms. This has also led to a surge in bankruptcies within the construction industry, as the number of new residential projects is rapidly decreasing.

The Norwegian M&A market in Q3 2023 continues to grapple with uncertainty, with a noticeable deceleration in the number of transactions. A total of 136 deals were recorded in Q3, bringing the number of deals in 2023 per end of Q3 to 533, a decline from 567 in the equivalent period in the previous year. The overall transaction value has decreased to EUR 15,426m per end of Q3, a significant drop from EUR 33,123m during the equivalent period last year. Despite these hurdles, transactions persist across a range of sectors. The equity capital markets are also demonstrating signs of resurgence, notwithstanding an initially slow start due to macroeconomic volatility. Initial Public Offering (IPO) activity is still subdued, with only two new listings on the Euronext markets in the third quarter.

On 6 October 2023, the Government released the 2024 National Budget, with a proposed resource rent tax on onshore wind power as one of the main changes. The resource rent tax will be in addition to the ordinary corporate income tax and take effect from 1 January 2024. However, changes may occur as it is a minority government proposal.

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M&A and Corporate Law

Key contacts: Harald Hellebust, Jarle Kvam, Gunhild Dugstad and Svein-Helge Hanken

The trend from the first half of 2023 continues into Q3 in the Norwegian M&A market: uncertainty for the macro-economics and many transactions at slow speed. With 136 registered deals being made in the third quarter, the Norwegian market has per the end of Q3 2023 seen a total of 533 registered deals, compared to 567 at the same time last year. The descending trend seen from the end of the second quarter has hence continued, although not as we saw from Q1 to Q2. Looking at the deal values, the total registered deals in the Norwegian market now amounts to EUR 15,426m per end of Q3, compared to EUR 33,123m per the same period last year. The two sets of the picture for a modest Norwegian M&A market, far from the levels of previous years. With the Norwegian Central Bank signaling in September that an additional policy rate increase from 4.25 per cent to 4.50 per cent is expected within the end of the year, we could see the trend continuing for the remaining part of 2023 and into 2024.

Despite macro-economics effecting available funding and general activity levels, deals are continuing to be made across numerous sectors. Activity among listed issuers picked up, highlighted by the announced merger between PGS and TGS. The quarter saw continued activity within the public-to-private market, with the strong performance of foreign currency against the Norwegian Krone as a key-driver. The technology sector remained a high-performer, with notable transactions including the voluntary offer by a consortium led by Goldman Sachs Private Equity on Kahoot, and on Euronext Growth, Unifon’s acquisition of Nortel. Rumors of an acquisition of Adevinta by a consortium led by Permira and Blackstone also stirred the market.

Wiersholm has advised on 92 deals year-to-date, as of the end of Q3, with a total deal value of EUR 6,394m. This ranks us #2 in the M&A rankings of legal advisers in Norway by deal count, and #3 in value, according to Mergermarket.

Welcome to Nordic Buy Out Forum, December 7 2023

Key contact: Jarle Kvam

Nordic Buy Out Forum is the biggest annual M&A event in the Nordics. The event is initiated and organised by Wiersholm and supported by the Norwegian Venture Capital and Private Equity Association (NVCA).

Save the date and register for the 2023 event now.

Equity Capital Markets

Key contacts: Anne Lise E. Gryte, Simen Mejlænder, Sverre Sandvik and Tone Østensen

The third quarter in the Norwegian equity capital markets began slowly, affected by macroeconomic instability. However, signs of recovery emerged towards the end of the quarter, with inflation seeming to be stabilizing, providing a more favorable market environment. The IPO activity so far in 2023 has been low with very few IPOs and new listings, which continued into the third quarter, with only two new listings on the Euronext markets. However, the third quarter is often a slower quarter for IPOs and listings, much caused by the summer holidays. Oil and oil service are still the strongest sectors within ECM, with Beerenberg being one of the two new listings. The cautious optimism that we have seen thus far in 2023 continues, but markets are still unstable and it is challenging to predict whether the IPOs cases that are lined up for the fourth quarter will have enough investor backing to launch.

Tax

Key contacts: Nicolay Vold, Andreas Bullen and Bettina Banoun

Norwegian National Budget 2024

The Government released the 2024 National Budget (full text in Norwegian only here) on 6 October 2023. It is important to keep in mind that this is a proposal from a minority Government that will primarily go to the Socialist Left Party to secure a majority. Consequently, there may be modifications to the 2024 National Budget initially published by the Government.

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