March 14, 2018 / 4:07 PM / 6 days ago

Foreign cash dries up in Russia M&A deals, domestic deals at 6-year high

LONDON (Reuters) - The volume of Russian acquisitions by foreign investors has plunged by nearly 90 percent so far this year, with the number of deals hitting their lowest since 2005 in the run-up to presidential elections, Thomson Reuters data showed.

Inbound merger and acquisition (M&A) volumes totaled $303.5 million across 32 transactions since the start of the year, down 87 percent compared with the same period of 2017, which had seen a very strong start. France was leading the countries buying into Russian firms, followed by Spain and Bermuda.

International investors are cautious as tensions have been rising between Russia and the West ahead of Sunday’s election which is expected to deliver a landslide victory to President Vladimir Putin.

(For a graphic of Russian Inbound M&A Volumes Year-To-Date click

The U.S. government said in February it was working on new sanctions against Russia for a range of activities, including meddling in the 2016 election. In March, the European Union extended sanctions imposed over the annexation of Crimea while British Prime Minister Theresa May on Wednesday announced measures in response to a nerve toxin attack on a Russian former spy.

Russian outbound M&A volumes were also lackluster.

    Russian buyers have spent only $5 million acquiring foreign companies so far this year, the second lowest since 1999.

    That marked a slight increase from last year when no activity during the first few weeks was recorded for the first time in over two decades.

    The volume of Russian domestic M&A, however, soared to a six-year high, despite the lowest number of transactions since 2008, thanks to a blockbuster deal.

    In February, state-lender VTB (VTBR.MM) spent $2.5 billion on a 29.1 percent stake in Russian supermarket chain Magnit (MGNT.MM) - the largest M&A deal domestically this year.

    Reporting by Tom Balmforth; Editing by Mark Potter

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