Deal-doers confident following Brexit bounce-back
Deloitte Central Europe Private Equity Confidence Survey
Prague, 13 June 2017 – There are expectations of increased activity in Central Europe’s (CE) private equity (PE) landscape, with the Index gaining some momentum lost during the last Deloitte Central Europe Private Equity Confidence Survey.
“The private equity market, including the Czech one, is more optimistic now than it was in 2016. This is evidenced by increasing activity especially in the middle-market segment; 2016 was a strong year in Central Europe in contrast to other European regions where Britain’s referendum on its exiting the EU caused some pausing,” says Ondřej Jež, Director at Consulting department at Deloitte. “The current atmosphere indicates that the market will continue to grow,” he adds.
The post-Brexit slump in private equity activity now appears to have been more pause than paralysis, particularly in Central Europe, where year-end activity saw the region blip powerfully on investors’ radars. This was because a number of large deals and exits were recorded, and dealflow is expected to continue apace: nearly half of respondents (47%) expect an uptick in activity, up from a third six months earlier. Deal appetite is strong, with 63% of respondents expecting to buy more than they sell in the coming months.
“Optimism of private equity investors is connected to the ongoing positive economic situation, which is evidenced by the accelerated growth in GDP in most European countries, especially in Central Europe including the Czech Republic, in combination with the available and relatively cheap debt financing“ says David Marek, Chief Economist at Deloitte.
The number of those expecting an improvement doubled (16%). Equally inspiring is that just a tenth expect a deterioration in conditions, down from 30% in October 2016.
Market leaders continue to be the most competitive targets in the region, though mindsets are shifting, with middle-sized growing companies shooting up the table: 42% expect this segment to attract the highest competition for investment over the coming months, more than double last survey’s 20%.
For full survey results, please click here (PDF).