The Romanian private equity and venture capital market lags behind CEE and Europe in terms of fundraising and needs more diverse funding providers and a stronger investor base in order to reach its potential

The Romanian private equity (PE) and venture capital (VC) market significantly lags behind Central and Easter Europe (CEE) and the entire European industry in terms of fundraising, with a total of EUR 128.2 million raised between 2018 and 2021, compared to EUR 7,288 million during the same period in CEE, according to the Romanian Private Equity Association (ROPEA) report for 2021 and first half of 2022, conducted by ROPEA and Deloitte Romania, based on data provided by Invest Europe, one of the largest global associations of PE and VC, and on publicly available information. The low volume of the local industry is mainly explained by the lack of diversification of funding providers, as the Romanian market is highly dependent on government agencies, including international financial institutions such as European Investment Fund (EIF) or European Bank for Development and Reconstruction (EBRD), which represented 61% of all fundraising between 2018 and 2021, followed by family offices and private individuals (34%) and by other types of investors, such as pension funds, banks and other asset managers and sovereign wealth funds, which accounted only for 6%. The CEE landscape is more diversified, with the government sources accounting for 39% of all fundraising between 2018 and 2021, followed by corporate investors, pension funds, banks and other asset managers and sovereign wealth funds (38%), family offices and private individuals (13%), and Fund of Funds (10%).

On the other hand, the local economy provides attractive opportunities for the existing local and regional players, according to the report, but, in order for our country to reach its potential in this field, it needs to develop a stronger local investor base. The current context, marked by the recent launch of the Recovery Equity Fund, a program within the National Recovery and Resilience Program, which implies the deployment of EUR 400 million through the Funds of Funds to fund managers, is optimal for such development, the report indicates, but the successful deployment of the funds depends on the existence of co-investors, including local capital providers, such as pension funds, corporates or private individuals.

“This comprehensive report, which is an excellent source of information for professional investors, entrepreneurs and authorities, confirms ROPEA’s previous assessments on the industry status, which highlights that there is still significant room for growth in order to reach a comparable level to the region and the larger European one. We will continue our efforts to advocate among the local entrepreneurs and the Romanian authorities the role of financial investors, which can contribute significantly to job creation and GDP growth with the financial and human capital they invest in businesses, marketing know-how and organizational capabilities. Sectors such as IT, technology, medical services, green and social impact have shown strong progress and provide the grounds for clear competitive advantages for our economy and for the investors who decide to support them,” stated Horia Manda, Chairman of the Board of ROPEA.

"The Romanian market has great potential to develop businesses which can become significant local and regional players and the CEE private equity ecosystem is in a good position to support the growth of small and medium local players to the next level. Additionally, the increasing role of ESG factors in the investment process represents an opportunity for both investors and beneficiaries. But in order for the local market to develop, it needs more diversified financing sources, a need which was also highlighted by the relevant players for this field that we have interviewed while conducting this report," said Radu Dumitrescu, Financial Advisory Partner-in-charge, Deloitte Romania.

The report is fully available on ROPEA’s website.

About ROPEA

ROPEA is an independent, non-profit organisation, promoting the interests of the Romanian Private Equity and Venture Capital industry. We collaborate to provide capital, unlock potential, grow businesses and deliver enhanced returns to investors. ROPEA was initially established as SEEPEA – the South Eastern Europe’s Private Equity Association - in 2005, with a regional role to educate and foster better understanding of the importance of private equity to the SEE economies, in support of entrepreneurship, innovation and development.

As private equity & venture capital grew more important within the SEE countries, the Association became country focused since 2019 and represents the interest of Romanian private equity and venture capital industry. ROPEA's mission is to interconnect the Private Equity and Venture Capital community, assist in the development of Private Equity and Venture Capital industries and represent their interests. We also aim to improve the efficiency of the sector by increasing its awareness and widening access to it, proving the positive role of our industry in the Romanian economy.

Please see https://ropea.ro/about-ropea/ to learn more about ROPEA.

About Deloitte

Deloitte provides industry-leading audit and assurance, tax and legal, consulting, financial advisory, and risk advisory services to nearly 90% of the Fortune Global 500® and thousands of private companies. The firm’s professionals deliver measurable and lasting results that help reinforce public trust in capital markets, enable clients to transform and thrive, and lead the way toward a stronger economy, a more equitable society and a sustainable world. Building on its 175-plus year history, Deloitte spans more than 150 countries and territories. Its objective is to make an impact that matters through its 415,000 people worldwide.

Deloitte Romania is one of the leading professional services organizations in the country providing, in cooperation with Reff & Associates | Deloitte Legal, services in audit, tax, legal, consulting, financial advisory, risk advisory, business processes as well as technology services and other related services, through over 3,000 professionals.