Buyouts drive investment in CEE to six-year high

New data from Invest Europe show a 25% year-on-year increase in total investment in the region, with buyouts the vast majority of invested capital.

Private equity and venture capital investment in Central and Eastern Europe last year hit €1.6 billion, its highest amount since 2009, according to new data from Invest Europe.

The total investment amount increased 25 percent year-on-year, with the number of companies backed “stable” in comparison with 2014, totalling 312. The vast majority – €1.3 billion – of invested capital was in buyout transactions.

Poland attracted the most capital, accounting for 54 percent of total value, followed by Serbia, with 14 percent, Hungary with 10 percent, and Romania with 9 percent. Together these four countries made up 85 percent of total CEE investments by value in 2015.

Two large deals accounted for 37 percent of total investment in the region. Energy and environment was the most popular sector, followed by consumer goods and retail.

Poland also attracted the greatest number of transactions – 105 – followed by Hungary, Lithuania and Latvia.

“Last year’s increase in regional investment activity, at a new post-financial crisis high, points to a healthy and evolving market,” Robert Manz, managing partner at Poland’s Enterprise Investors and chairman of Invest Europe’s Central and Eastern Europe Task Force, said in a statement.

“Central and Eastern Europe continues to develop dynamic businesses and when the time comes to exit, these private equity-backed companies can have the international reach to appeal to global acquirers.”

Fundraising figures were considerably down on 2014, dropping almost 75 percent from €1.57 billion to just €418 million. As in previous years, the highest proportion of capital raised for the region – 36 percent – came from government agencies, followed by asset managers, which contributed 18 percent, and private individuals, who contributed 16 percent.

The majority of capital raised – 57 percent – came from within the CEE region, 38 percent from within Europe, 4 percent from outside Europe, and 1 percent from unknown geographies.

Of the total raised, €166 million was for venture deals, €107 million for buyout funds, €70 million for mezzanine funds, and €70 million for generalist funds.

It was another strong year for exits in the region, with just a slight drop in divestment value from €1.27 billion in 2014 to €1.24 billion in 2015. Four large exits comprised 40 percent of the total divestment value, although the region reached a record number of companies divested – 97, up from 74 in 2014. This was primarily driven by growth in venture-backed company exits, Invest Europe said.

The transaction statistics for the region reflect growth across Europe as a whole, where total investments increased by 14 percent year-on-year to €47 billion, and exits increased by almost 5 percent to €40.5 billion.