Private Equity Confidence Survey May 2017

Perspectives

Private Equity Confidence Survey - May 2017

Central Europe

The mood has shifted among Private Equity dealdoers in Central Europe, from stability and resilience in the midst of uncertainty last autumn, to more optimistic and deal-hungry now. Nearly half of respondents expect an activity uptick, up from just a third on the last survey. Perhaps unsurprisingly then, more than two-thirds of respondents (70%) intend to focus mostly on new deals over the coming semester.

This enthusiasm is mirrored in economic expectations, with more optimists and fewer pessimists than in the last survey. Indeed GDP growth in the region accelerated between Q3 and Q4 2016, and is expected to continue to improve this year, so the sentiment may be well founded.

Private Equity Confidence Survey – May 2017

The Private Equity market in Central Europe is set for a resurgence, according to the 29th survey on confidence in the region’s PE markets. The Index itself reflects this, with a gentle increase to 113 in this latest survey. The mood has shifted among Private Equity dealdoers in Central Europe, from stability and resilience in the midst of uncertainty last autumn, to more optimistic and deal-hungry now.

Central European Private Equity Index: Key findings

There are great expectations of increased activity in CE’s Private Equity landscape, with the Index gaining some momentum lost during the last survey. This is backed up by a number of factors. Nearly half of respondents (47%) expect an uptick, up from a third six months ago and the highest level recorded since 2011. This optimism may be mirroring recent activity, with a higher-than-usual number of €100m+ EV deals in the last year; Poland’s largest-ever Private Equity deal (Allegro); a large number of fund announcements, and liquid debt markets. The dealflow should continue apace: 63% of respondents expect to buy more than they sell in the coming months, the strongest appetite for buying since 2011, and 70% expect to focus mostly on buying in the coming months.

This activity is on the back of stable economies, with a doubling of those expecting an improvement (16%) and a shrinkage by two-thirds of those expecting a deterioration (10%) in the region’s economic backdrop. Three quarters (74%) expect the climate to remain the same, up from less than two thirds (63%) last time. Mindsets continue to shift as regards which segments are most competitive. Market leaders, long deemed the most competitive, continue to rank highly, but are losing ground to middle-sized growing companies, with 42% expecting this segment to attract the highest competition for investment. This is more than double last survey’s 20%.

 

The Private Equity market in Central Europe is set for a resurgence, according to the 29th survey on confidence in the region’s PE markets. The Index itself reflects this, with a gentle increase to 113 in this latest survey. The mood has shifted among CE PE dealdoers, from stability and resilience in the midst of uncertainty last autumn, to more optimistic and deal-hungry now.
Mark Jung, Partner, Private Equity Leader, Deloitte Central Europe