Recently, the European Bank for Reconstruction and Development (EBRD) declared that the Eastern European region has had too little investment and that an annual $75bn funding gap needs to be plugged. Preqin’s Fund Manager Profiles database lists 331 active private equity firms based in Central and Eastern Europe (CEE), accounting for 13% of all Europe-based managers. These firms have raised €26bn in aggregate capital commitments over the last 10 years, a small part of the €684bn raised by Europe as a whole, and have an estimated €11bn in dry powder.
Russia is home to 38% of CEE-based private equity firms, the most of any single country in the region and far ahead of Poland (12%). As well as being home to more firms than any other country in the CEE region, Russia has collected over half of all capital raised in the last 10 years by CEE-based fund managers. In terms of regions within CEE, firms based in the Commonwealth of Independent States (CIS) area have raised 58% of capital over the last decade, compared with 11% from Central Europe and 6% from the Balkans.
The largest private equity firm in terms of aggregate capital raised over the last decade is Russian Direct Investment Fund, having collected €3.9bn. The firm was established in 2011 by the Russian Government and focuses on growth capital investments, targeting mid-market companies primarily in Russia. The firm has a range of joint ventures with the governments of other countries including China, Japan, France and Italy.
Outside Russia, the Actera Group is the largest firm in the region. Headquartered in Istanbul, the firm pursues investment opportunities across a wide range of industries, both in established and emerging companies focusing on growth capital and buyout situations. Actera’s most recent fund, Actera Partners II, closed on just under $1.1bn in 2012. Another Turkey-based private equity firm, Turkven Private Equity, is also in the top five largest firms in CEE in terms of aggregate capital raised.
Despite the fact that fundraising figures for 2015 could finish on a low unseen since 2010, with only 15 funds raising €1.9bn so far, the 80 funds in market targeting the region indicate a more positive outlook for 2016 and beyond.