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CEE investors to maintain or increase exposure in longer-term

A study by Preqin has found that 89 per cent of private equity investors in Central and Eastern European focused funds intend to maintain or increase their exposure to the region over the longer-term.

Over the past decade, the private equity market in Central and Eastern Europe has drawn a growing amount of interest from investors, culminating in a significant leap in fundraising in 2007, when 36 private equity funds with an exclusive focus on the region reached a final close, securing an aggregate EUR8.1bn.

However, fundraising in 2008 was less successful and saw a return to the aggregate commitment levels of 2005/6. So far this year, eight private equity funds with an exclusive focus on Central and Eastern Europe have reached a final close, raising EUR2bn between them.

At present, there are 50 private equity funds on the road with an exclusive focus on opportunities in CEE countries, seeking commitments totalling EUR9.3bn. So far, 21 of these funds have held an interim close, securing an aggregate EUR1.9bn in commitments.

Preqin asked investors whether their plans for investment in CEE focused funds had been affected by the financial downturn. Around two-thirds (65 per cent) said they had not adjusted their plans for investment in the region and a further four per cent said they were focusing more on the region as a result of the current economic climate.

However, 15 per cent of investors that have previously shown an interest in CEE said they anticipated making fewer commitments to private equity funds targeting the region than in past years and a further 15 per cent were not intending to make any new commitments for the foreseeable future.

Over the longer term, the outlook for private equity managers seeking to raise fresh capital to invest in Central and Eastern Europe is reasonably positive. A third of LPs expect to increase their exposure to CEE over the next three to five years and an additional 56 per cent intend to maintain their current level of exposure to the region. Just 11 per cent said they expected to decrease their exposure to CEE.

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