Private equity fundraising for CEE hits highest level in a decade

Warsaw EBRD annual meeting

Private equity fundraising for Central and Eastern Europe hit its highest annual level in a decade in 2018, reaching 1.8 billion euros, according to new data from Invest Europe, an NGO representing European private equity funds, venture capitalists and their global investors.

Buyout funds in CEE raised 1.1 billion euros in 2018, while the region’s venture capital funds attracted over 500 million euros for the second year in a row, according to the NGOs Central and Eastern Europe Private Equity Statistics 2018 report. The number of companies backed increased by 50 per cent year-on-year to almost 400, the second-highest on record.

“The strong levels of private equity fundraising, investment and exit activity in Central and Eastern Europe in 2018 demonstrate that the region continues to develop as an attractive investment destination,” said Robert Manz, chair of Invest Europe’s Central and Eastern Europe task force. “Global investors see that private equity and venture capital investment is one of the best ways to access the region’s robust markets and high-growth companies.”

According to the International Monetary Fund (IMF), all countries in the CEE region surpassed the European Union’s 2.1 per cent GDP growth rate in 2018. Eight countries achieved an annual growth above four per cent, with Poland, Hungary and Latvia experiencing particularly high growth rates, reaching 5.1 per cent, 4.9 per cent and 4.8 per cent respectively.

Poland saw CEE’s highest amount of private equity investment with its companies receiving 850 million euros in total last year. The Czech Republic was close behind with 767 million euros invested into its companies via private equity and venture capital funds. Hungary had the highest number of companies receiving investment with over 190 backed last year, almost half of the regional total.

The biotech and healthcare sector took the highest share of CEE’s private equity investment with 32 per cent of the total value in 2018, while consumer goods and services companies received 27 per cent of funding.

The region also has strong technology start-up credentials, including Czech cyber-security group Avast which was 2018’s largest tech initial public offering (IPO) on the London Stock Exchange at a valuation of 2.6 billion euros. Meanwhile, Romania’s robotic process automation firm UiPath achieved a 6.3 billion euros valuation during a funding round earlier this year, making it one of the world’s most valuable artificial intelligence companies.