Private Equity Confidence Survey May 2017

Perspectives

Private Equity Confidence Survey - Autumn 2017

Central Europe

Confidence and prospects are up, according to the latest Deloitte Central Europe Private Equity Confidence Survey. Strong exit and fundraising activity is buoyed by healthy macro backdrop as the Index hits a three-year high.

Following a gentle increase in the spring of 2017, confidence in Central Europe (CE) has rebounded more strongly over the last six months to end on 130. The uptick, from 113 in the spring, is encouraging as it marks the highest level in three years. Much of this is likely down to confidence in the economy, with 90% of respondents expecting the healthy backdrop to remain the same (64%) or improve (26%) over coming months.

Central European Private Equity Index: Key findings

The heightened pace of activity is set to continue in Central Europe, with a number of factors supporting the Index’s rise. In line with the spring survey, two-thirds of respondents expect to focus mostly on buying in the coming months. Their appetite may be boosted by the ability to finance these deals, given a doubling of respondents expecting leverage to become more available (21%). This is the highest level in two years.

A stable, buoyant economy has long underpinned deal-doers’ confidence, and indeed more than a quarter of respondents (26%) expect an improvement over the coming months, up more than three-fold from a year ago.

Deal sizes are expected to increase. The aforementioned ample leverage in the markets may be giving deal doers confidence to pursue larger deals, with 36% of respondents expecting sizes to increase – the highest level in more than a decade since the heyday of spring 2017. This is in marked contrast to the last Deloitte survey of May 2017, when a polarised market meant a fifth thought they’d increase and another fifth expected a decrease.

 

What a difference a year makes. Last autumn the world was reacting to the surprise EU Referendum result, with many investors becoming defensive almost overnight. Our Central European (CE) private equity (PE) Confidence Survey reflected this. Now, with an incredible first three quarters of the year and a hat-trick of headline – grabbing exits casting a positive light on the region’s ability to deliver returns, deal-doers are confident, with the Index increasing markedly to 130 in our latest survey. Respondents are assured of CE PE’s ability to deliver deals – larger than before, with 36% expecting sizes to increase, the highest level in a decade.
- Mark Jung, Partner, Private Equity Leader, Deloitte Central Europe

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Private Equity Confidence Survey – Autumn 2017

Economic confidence has continued its rise, with more than a quarter of respondents (26%) expecting an improvement over the coming months, up more than three-fold from a year ago. Nearly two-thirds expect the backdrop to remain the same – equally encouraging given growth in the region has had a strong run, with 4.1% forecast for this year, an 11-year high.

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