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Private Equity and Venture Capital funds invest a record amount in CEE companies

By
Invest Europe
Private Equity and Venture Capital funds invest a record amount in CEE companies

Private equity firms invested in record 464 CEE companies in 2019. Investments rose 7% to €2.95bn, and VC investments achieved a new record. Private equity firms invested in a record 464 companies in Central and Eastern Europe (CEE) in 2019., with investments increasing by 7% year-on-year to €2.95 billion, as the industry strengthened its commitment to the SMEs and start-ups that are fuelling the region’s economic growth and innovation, according to Invest Europe data.

Invest Europe, (former European Private Equity and Venture Capital Association (EVCA)), the association representing Europe’s private equity, venture capital, and infrastructure sectors, as well as their investors, published its 2019 Central and Eastern Europe Private Equity Statistics. The report shows that private equity investment reached the second-highest total ever recorded at €2.95 billion, with the number of companies up 10% on the previous year to a new all-time high. Both figures are well above the previous five-year average for the region. Venture capital investment doubled to a record €338 million in 2019, with 369 companies receiving VC support. The result followed record VC fundraising over the past three years, underlining the CEE’s booming start-up culture, focused particularly on Hungary and Poland.

Robert Manz, chair of Invest Europe’s Central and Eastern Europe Taskforce, commented: “Since the fall of the Berlin Wall three decades ago, Central and Eastern Europe has undergone a remarkable political and economic transformation. Private equity is proud to have played its part, bringing not only capital but also the expertise and skills to help drive the region’s successful convergence process.”

Eric de Montgolfier, CEO of Invest Europe, added: “The 2019 Central and Eastern Europe Private Equity Statistics paint the picture of a mature investment ecosystem that still has plenty of room to grow. Across the region, private equity and venture capital are supporting innovation and business expansion, which in turn is driving economic growth and job creation.”

Estonia was the leading destination in terms of investment in 2019, accounting for 23% of the private equity capital invested in the region, followed by Poland (20%) and Romania (19%). About half the investment flowed into the information and communication technology (ICT) sector, aiming to follow in the footsteps of CEE tech leaders including Bucharest-founded business automation software group UiPath and Polish online medical appointment booking system developer DocPlanner.

Fundraising for Central and Eastern European private equity funds was €1.4 billion in 2019, in line with the previous five-year average. At €631 million, venture capital firms accounted for 45% of the capital raised, the second-highest total on record. Buyout funds represented 40% of the total raised, with growth funds accounting for the remaining 15%.

Mirna Marovic, President of the Croatian Private Equity and Venture Capital Association (CVCA) said that there several reasons to be optimistic on the private equity and venture capital industry in Croatia. “The official Invest Europe statistics show an impressive increase in private equity activity, but they also understate the true figures in the venture capital industry. In 2019, first Croatian venture capital fund Fil Rouge Capital II started its operations with fundraised amount of €45 million and this activity is not presented in the official statistics since Invest Europe methodology excludes incubator programs. Besides, many Croatian startups which have Croatian founders and development teams in Croatia have decided to legally incorporate their companies in more investor-friendly jurisdictions, so those companies are not counted either in the official statistics. However, already the numbers showed in the official statistics compiled by Invest Europe and with assistance of the CVCA provide all the reasons to be optimistic.”

Croatian private equity investments accounted for €94 million in 2019., which is an increase of 16%, compared to 2018. (€81 million). The value of exits was €23 million in 2019, much higher than only €2 million in 2018. In 2019,  private equity investment as a percentage of GDP in Croatia was 0,174%, similar to the CEE average of 0,175%. Serbia totaled 0,905% which is the second largest in Europe, above the pan-Europe's average of 0,533%.

As for private equity investments in Croatia, Polish private equity firm Enterprise Investors (EI)
acquired a 100% stake in local retail chain Studenac in 2018 and the remaining 35% stake in bakery and confectionery manufacturer PAN-PEK in October 2020. In 2019, private equity firm Mid Europa Partners (MEP) has acquired a majority stake in Mlinar, a leading Croatian retail and wholesale bakery.

Please download Invest Europe's 2019 Central and Eastern Europe Private Equity Statistics.

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