Tethys Investments

Private Equity Investments in Eurasia Account for A Tiny Share of Global PE Market

The private equity investment in Central and Eastern Europe (CEE which excludes Russia, CIS and Turkey) rose to €1.6B ($1.9B) last year, the highest figure since 2009, while fundraising for investing in the region grew by 62% to €621M ($740M), according to the annual report by "Invest Europe" and French law firm Gide.

Despite this growth, private equity investments in the CEE region represented less than 0.1% of total assets under management of the global PE industry, which hit $4.3 trillion in 2016.

CEE private equity investment activity in 2016 was concentrated in a few countries. Poland remained the leading country with 45% of the region's total investment value and home to almost a quarter of the companies receiving funding. It was followed by the Czech Republic, Lithuania, Romania and Hungary. These five countries comprised an aggregate 81% of total CEE investment value and two thirds of the companies receiving private equity investment.

Buyout investments remained stable year-on-year at €1.2 billion, while growth capital funding continued as the region’s second most important type of private equity investment at €285 million and grew 16% year-on-year. Venture capital investments reached €100 million, equaling 2015's level.

Funds of funds were the largest source of capital, accounting for 27% of the region's capital raised in 2016, followed by pension funds with 16%. Government agencies, including multilateral organizations, were the leading source of capital in CEE from 2009-2015, but comprised just 15% of the total in 2016.

From a geographic perspective, European investors from outside the CEE region were the leading source of funds in 2016 and accounted for 58% of the total capital raised. Funding from domestic sources within CEE returned to an historically low level and comprised only 5% of total fundraising in 2016. CEE buyout funds raised €445 million in 2016, compared with just €94 million in 2015. However, the region's venture capital fundraising dipped to €102 million, lower than the previous two relatively strong years.

Private equity exits across CEE in 2016 reached €1 billion, measured at historical investment cost. Importantly, the 2016 result confirms a continuing trend of elevated CEE exit activity that commenced in 2011.

Invest Europe is the association representing Europe's private equity, venture capital and infrastructure sectors, as well as their investors.

Source: Invest Europe & GIDE. CEE Private Equity Statistics 2016. August 2017.

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