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Investors in Central and Eastern European Private Equity – December 2015

by Michael Brown

  • 10 Dec 2015
  • PE

Since the beginning of 2014, 71 private equity funds with a geographic focus that at least partially includes Central and Eastern Europe (CEE) have reached a final close, raising a total of $15.4bn. Countries in this region were hit particularly hard by the Global Financial Crisis, with nations such as Poland and Hungary among the worst affected. With the region now in recovery, due in part to the actions of the European Central Bank (ECB), investors are seeking private equity opportunities in CEE countries.

Preqin’s Investor Intelligence database on Private Equity Online currently tracks 306 institutional investors with an appetite for the CEE region, collectively allocating a total of $824bn to the private equity asset class. The largest proportion of these investors are based in North America (40%), which along with Western Europe (32%) and CEE (15%) account for the bulk of investors targeting the region.

Many different investor types have committed to the 71 CEE-focused vehicles closed since the start of 2014. Private equity fund of funds managers and public pension funds lead the way, accounting for 17% and 15% of LPs respectively. As shown in the above chart, banks & investment banks (9%), insurance companies and government agencies (each 8%) have also been significant investors in funds focused on the region, closely followed by private sector pension funds and foundations.

Venture capital funds, buyout funds and growth funds are all widely preferred by investors committed to a CEE fund, with 76%, 75% and 67% respectively targeting such fund types. Distressed debt (45%), mezzanine (41%) and private equity fund of funds (39%) are also broadly sought after.

These investors expect to allocate between $25bn and $30bn to private equity funds over the next 12 months,  representing up to 63 new fund commitments; it will be interesting to see whether more investors will be drawn to opportunities in the CEE region as the economic recovery continues.

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