Allegro deal pushes CEE and CIS to record first half

The purchase of the Polish online marketplace in a club deal accounted for more than 80% of investment in the region.

The acquisition of Polish online marketplace Allegro in a club deal between European giants Cinven and Permira and CEE specialist Mid Europa Partners boosted CEE and CIS investment to its highest first half since 2008.

The firms invested just over $2 billion in the company in a deal which completed in January. The transaction – first announced in October – was voted both Deal of the Year in Europe and Co-investment of the Year in Europe in the Private Equity International Awards 2016.

The transaction was both Permira’s and Cinven’s first direct investment in Poland.
This made up just over 80 percent of the $2.5 billion invested in 48 deals in CEE and CIS in the first half, according to data from the Emerging Markets Private Equity Association released Wednesday. This compares with $1.1 billion invested in 98 transactions in the whole of 2016.

Private equity managers invested $18.9 billion in 792 transactions across emerging markets in H1, according to data from EMPEA, putting the year on track to become the most prolific investment year since EMPEA began reporting on investment in 2008.

At PEI’s Central and Eastern Europe roundtable last year, participants agreed there is a “growth gap” in the region of which investors can take advantage.

“Growth here will be better than markets in Western Europe by between 1 to 2 percentage points per year for the next 15 to 20 years,” said Pawel Padusinski, a partner at Mid Europa Partners. “We see the catch-up story – mainly in the consumer-facing industries.”

Real GDP growth in Poland was 2.8 percent in 2016 and is projected to be 3.4 percent in 2017, according to the IMF. This compares with 1.8 percent and 1.7 percent in Western Europe.