Investment in CEE companies hits record high

Central and Eastern Europe received €1.3 billion in private equity and venture capital investments in 2014.

A record number of companies in Central and Eastern Europe (CEE) received private equity and venture capital investment in 2014, according to the European Private Equity and Venture Capital Association (EVCA).

Last year saw 290 companies in the region receive capital, a 20 percent increase from 2013, which itself was a post-financial crisis peak. The new high was led by Poland, where 78 companies received PE and VC funding throughout the year, according to the EVCA's CEE Statistics 2014 report.

“Higher GDP growth rates, low inflation and falling unemployment in many CEE countries created an attractive backdrop for private equity firms and international investors to focus on the region,” EVCA CEE Task Force chairman Robert Manz said. “We encourage more investors to investigate the attractive opportunity CEE presents.”

Poland was also the largest market for exits in CEE last year, with €530 million of divestments  (42 percent of the total regional divestment). This was a record for Poland, and an 86 percent increase from 2013.

Capital invested across the region last year totalled €1.3 billion, a 66 percent increase from 2013. Of that, 71 percent was from buyouts, which the report said drove the year-on-year rise: in 2014 buyouts attracted €935 million, up 84 percent from €508 million in 2013.

The communication sector remained the most popular across the region, with €492.2 million (37.5 percent) of all investments. This is more than triple the previous year’s amount of €133.5 million and more than double its market share of 16.9 percent.

Eighty percent of the total capital went to four countries in the region: Serbia, Czech Republic, Poland and Hungary. Serbia received the highest amount of capital at €326 million (a quarter of the region's investments). This was largely due to KKR’s acquisition of United Group from Mid Europa Partners in 2014 which accounted for 99 percent of the total Serbian investment.

All major countries saw an uptick in capital investments except for Poland, Bulgaria and Ukraine.

“The conditions are right for investors to focus more time and resource on the CEE private equity and venture capital industry,” EVCA chief executive Dörte Höppner and Manz wrote in the report. “We expect that interested parties will share our continued enthusiasm for the attractiveness of the dynamic CEE region.”