While many Western European economies are contracting and facing a debt crisis, the CEE region has met strong growth expectations, assisted by EU integration and favourable demographics, and therefore has drawn an increasing level of interest from GPs looking for potential investment capital. Preqin Investor Outlook: Private Equity, H2 2012 reports that 17% of LPs that consider investing in emerging markets see CEE as presenting the best investment opportunities, which is a slight increase from H1 2012, when 12% stated a similar preference.
Preqin Investor Network currently tracks 70 private equity funds on the road targeting investment opportunities in Central and Eastern Europe. Those vehicles are looking to raise $25.1bn in total, with an average fund size of $392mn. In terms of GP location, 17 private equity funds in market focused on CEE are based in Russia and 12 in the US. Of all CEE-focused funds on the road, 17 are venture capital funds, followed by 15 growth vehicles, 14 funds of funds and 13 buyout funds.
One example is AVG CIS Agricultural Opportunities Fund, an agro-industrial private equity fund that invests in Russia. It is the maiden fund of Moscow-based AVG Capital Partners and is looking to raise $1.5bn. Another prominent vehicle, Polish Enterprise Fund VII, is seeking €826mn to target investment opportunities across the CEE region.