BY Fraser Tennant
Fuelling the coronavirus (COVID-19) recovery and underpinning the region’s long-term economic and social development, 2020 saw private equity (PE) invest heavily in Central and Eastern Europe (CEE), reveals a new report by Invest Europe.
In its ‘2020 Central and Eastern Europe Private Equity Statistics’, Invest Europe reports that PE firms invested in 566 companies last year – an increase of 15 percent on 2019 – with venture capital (VC) the driving force. Drilling down, PE firms backed 474 start-ups and scale-ups with total investment of €358m.
In terms of key jurisdictions, Poland was the leading destination, with a quarter of the region’s total investment value – €431m – and home to almost a fifth of the companies receiving funding. By investment value, it was followed by Estonia with 21 percent of the CEE total.
Additionally, the report notes that Hungary was the leading destination for investment by deal number, with 236 companies receiving €226m in funding, 220 of which were VC. Poland reported a total of 105 new investments, of which 82 were venture deals.
“PE is supporting more companies than ever across CEE,” said Bill Watson, chair of the Central and Eastern Europe taskforce at Invest Europe. “These are fast-growing businesses that can help drive the region’s recovery from the effects of the pandemic, as well as its long-term economic and social development.”
Across the CEE and all investments, information and communication technology was the leading sector, accounting for almost half of companies backed, while consumer goods and services ranked second.
“PE-backed companies in CEE are developing into local, regional and global champions,” said Eric de Montgolfier, chief executive of Invest Europe. “They are highlighting not only the talent, skills and entrepreneurship inherent in the region, but also the vast opportunity still to come as experienced managers work with businesses to take them to the next level.”
However, PE fundraising for investment in CEE did fall in 2020, dropping to €1bn, as fundraising cycles meant that the region’s large fund managers were not in the market raising new funds. In contrast, the VC sector raised €667m last year, the second-highest total on record, positioning the sector for a sustained high level of investment activity in the coming years.
Mr Watson concluded: “CEE is on a path that converges with the rest of Europe and PE can play an essential role in enabling companies in the region to achieve their full potential.”
Report: 2020 Central and Eastern Europe Private Equity Statistics