2011 was another year of growth and recovery from the 2009 trough, establishing the Central and Eastern European region as an area of reasonable stability with relative fiscal prudence and continued positive prospects.
This is according to the European Private Equity and Venture Capital Association’s Central and Eastern Europe Statistics 2011 report.
Private equity and venture capital funds focused on CEE attracted EUR941m of new funds in 2011, up 48 per cent compared to 2010 (and more than 135 per cent on the previous year), an increase mainly driven by buyout funds. In line with overall European trends, these figures illustrate the region’s continued recovery and important role in the European economy.
A total of EUR1,244m was invested in the CEE region in 2011, a slight decrease of 4.6 per cent compared to 2010.
Total investments as a percentage of GDP remained relatively constant for both the CEE region and for Europe as a whole in 2011, with the CEE region recording 0.105 per cent compared to the Europe-wide average of 0.326 per cent. This indicates the untapped potential of the CEE region for development of private equity.
A total of 195 companies received private equity backing in 2011 in the CEE region, a significant increase of 17 per cent compared to 2010, driven by an increase in venture financings.
Investment activity was concentrated in the CEE region’s larger countries in 2011, similar to previous years, with Poland again accounting for the largest share of CEE investments at 55 per cent of the total.
Venture capital investments grew significantly by 57 per cent to account for 7.6 per cent of total investments in CEE in 2011, one of the highest recorded proportions, driven primarily by a significant 85 per cent increase in start-up investments. The number of venture financed companies grew to 97, or 49 per cent of all companies receiving private equity investment in CEE in 2011. Certain countries’ programmes targeted to close the “equity gap” are starting to have an impact.
Divestment activity in 2011 showed a significant increase to reach an all-time high in CEE of EUR1,383m (measured at investment cost).
Dörte Höppner, the EVCA’s secretary-general, says: “The Central and Eastern Europe region’s 2011 positive dynamics demonstrates how private equity and venture capital can be a major provider of finance, and a reliable one, stable throughout the toughest economic conditions, driving Europe’s economic recovery.”