Private equity and venture capital investments into companies in the Central and Eastern Europe region reached a total of €1.6 billion in 2016 — the highest amount since 2009 — new data from Invest Europe reveals.
Investment capital last year was most focused on Poland, followed by the Czech Republic, Lithuania, Romania and Hungary respectively, according to the industry association’s new Central and Eastern Europe Private Equity Statistics 2016 report. Consumer goods and services was the most targeted sector, attracting 23% of the investment value, while information and communication technology (ICT) was a close second with 22%.
“Private equity activity in Central and Eastern Europe was strong in all key areas last year — investments, divestments and fundraising — demonstrating a vibrant market with robust interest from GPs and LPs,” said Robert Manz, Managing Partner at Poland’s Enterprise Investors and Chairman of Invest Europe’s Central and Eastern Europe Task Force. “The region’s fund managers are hard at work maximising buying and selling opportunities, while institutional investors are showing renewed appetite for the region.”
The CEE region’s total private equity fundraising amount rose 62% year-on-year to €621 million in 2016, as larger fund managers returned to the market, and in line with a Europe-wide increase in fundraising for the asset class. European investors from outside the CEE region provided 58% of the total capital raised, while funding from investors outside of Europe grew nearly nine-fold, notably from the US. Long-term private investors contributed 43% of the overall fundraising amount, with funds-of-funds the largest source of capital, accounting for 27%, followed by pension funds with 16%.
The total number of companies divested in CEE increased to a record high of 112 in 2016, mainly driven by exits of venture-backed companies. Sale to another private equity house — the secondary market — took over as 2016’s most utilised exit route in terms of amount, accounting for €476 million of value at historical investment cost and 46% of the region’s total divestment value. Trade sale remained the most common route in terms of the number of companies divested at 37. Poland was the largest market in the region for exits, at 35% of divested amount at cost, followed by the Czech Republic, while ICT was the region’s most important sector for divestments, including two out of the four largest exits last year.