Private equity and venture capital investment into companies in Central and Eastern Europe (CEE) reached a record €3.5bn in 2017, according to new data from Invest Europe.
A 113 per cent year-on-year increase, this surpasses the region’s previous peak in 2008 by 40 per cent, reveals the association’s Central and Eastern Europe Private Equity Statistics 2017 report, which also shows strong results across fundraising and exits.
CEE’s consumer goods and services sector attracted the majority of investment capital, with three-quarters of the total, while technology followed with 11 per cent.
Country focus
Polish companies were the big draw, receiving 71 per cent of the total, followed by those in Romania, Hungary and Latvia respectively.
Recent private equity-backed successes include Czech cyber security company Avast Software, which this year listed on the London Stock Exchange in London’s biggest ever tech IPO. Polish grocery store chain Dino Polska grew rapidly to nearly 630 stores before its IPO last year on the Warsaw Stock Exchange. In March, Romania’s robotic process automation vendor UiPath was valued at over US$1bn, more than tenfold the company’s valuation when it last raised funding in April last year.
Romania was the EU’s fastest growing economy last year with an estimated GDP growth rate of 6.4 per cent, according to the European Commission.
Poland, the Czech Republic and Hungary economies are also growing at a faster rate than major Western European countries. Of the 12 EU members forecast to grow GDP by three per cent or more in 2018, nine are CEE countries.
Fundraising
Private equity fundraising in the market increased 46 per cent year-on-year to reach €1.3bn in 2017, including a record €360 million for venture capital fundraising.
European investors from outside CEE provided 38 per cent of the total capital raised, while global sources of capital outside of Europe contributed 26 per cent, driven by US-based investors. Funds-of-funds were the leading source of capital at 31 per cent of the total, followed by government agencies at 26 per cent.
Exits
Company exits in CEE reached a total value of €1.3bn, measured at historical investment cost, a year-on-year increase of 16 per cent and the region’s third highest annual divestment level. Secondary buyouts were the most used exit route with 38 per cent of the total value, followed by trade sales at 29 per cent.
Across the continent, total investment into European companies hit a 10-year high at €71.7bn, a 29 per cent year-on-year increase. Almost 7,000 companies received investment, of which 87 per cent were small and medium-sized enterprises.
• Invest Europe's Central and Eastern European Private Equity Statistics 2017 report is free to download from investeurope.eu