07 July 2011

CEE private equity shows robust growth according to EVCA

Private equity and venture capital funds focused on central and Eastern Europe attracted €645m of new funds for investment into companies in the region during 2010, up more than 60 per cent on the previous year.

In terms of exits, private equity firms in the region enjoyed a relative bonanza in 2010, following a difficult couple of years during the financial crisis. The value of divestments (at investment cost) grew by nearly 130 per cent to €300m. Corporate acquirers accounted for the largest portion of buyers, making up around 40 per cent of exits by value in 2010.

On the investment side, due to an absence of large and mega buyouts registered in 2009, the year 2010 showed a drop in private equity investment value to a level of €1.3bn from nearly €2.5bn in 2009. However, the number of companies obtaining private equity and venture capital investment in the region increased by nearly 30 per cent in 2010, with 160 investments, mainly driven by venture capital deals (up 61 per cent on 2009) and growth capital transactions (up 38 per cent on 2009). Although the number of buyouts fell by 13 per cent, buyout investments represented more than half of the total investment value across the region in 2010.

Poland was by far the largest private equity investment market in CEE, accounting for more than half of the total amount invested in the region. It attracted €657m of investment, more than twice the amount invested in Poland in 2009. The Czech Republic (€193m), Romania (€119m) and Ukraine (€96m) came next in the investment ranking in 2010.

Robert Manz, chairman of EVCA’s Central and Eastern Europe Task Force, said: “In 2010, central and Eastern Europe private equity showed its resilience with increased investor interest in new fundraisings and the re-awakening of the exit market. Investment levels were strong despite the lack of large-sized buyout transactions seen in the previous year. Firms across the region clearly notched up their activity on all fronts, a dynamic that continues throughout 2011. Expect the convergence play of CEE to re-emerge as a central theme for those active in this geography”.

Dorte Höppner, secretary general of EVCA said: “The central and Eastern Europe region demonstrates how private equity and venture capital can be a major provider of finance for SMEs across Europe. The role of venture capital and smaller buyouts in facilitating growth and development in the region should be a clear message to EU policymakers about the importance of nurturing all forms of SME finance”.

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