Joanna James: Countdown to 2008

As the credit crunch curtailed activity in developed markets in 2007, Central and Eastern Europe powered forwards. Advent International's regional head sees little reason to pause in 2008.

Joanna James

“The private equity market in Central Europe will continue to grow during 2008.  The market is still underdeveloped, and the increasing supply of capital earmarked for the region will drive demand for a new wave of ownership change. 

Entrepreneurs who founded their businesses in the early 1990s, and managers who took advantage of privatisation opportunities at the same time, are now looking to retire or to move into new activities.

The global credit crunch is having limited impact in Central Europe, where terms never reached the extremes seen elsewhere, and deal sizes tend to be smaller.  Mid-market deals should continue to be funded without difficulty.

During 2007, new funds were raised by firms already specialising in the region, and some managers from Western Europe set up dedicated teams.  Although increased competition drives prices to a higher level in the short term, over time it will lead to a growth in overall activity.” Joanna James, managing director, Advent International

In 2007 Advent expanded its activity in Central Europe, adding two new offices in Prague and Kiev, and adding six new professional staff to its team.  The group has also closed three new investments, and a fourth is currently subject to regulatory approval.

A particular focus during the year was the construction materials sector.  Advent purchased Ceramica, a Romanian fabricator of bricks and tiles, and towards the end of the year closed an investment in KAI, the leading Bulgarian manufacturer of ceramic tiles.  This brings to 34 the total number of companies Advent has backed in the region since 1995.

The move to Ukraine is an important development, making Advent the only international private equity firm with a dedicated team in the country.

During the year, Advent finally ended its involvement with the Bulgarian Telecommunications Company, which was sold to AIG Capital Partners.