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Private equity fundraising and investment rises in CEE in 200708/09/2008. Source: AltAssets. 
 CEE has seen two years of significant increases in fundraising and investment and a widening interest by investors in more sectors and countries, according a report released today by EVCA and its Central and Eastern Europe Task Force, based on PEREP_Analytics data.
Fundraising for CEE reached a new record level in 2007, with €4.25bn of new capital raised for the region. This represents an 89 per cent increase compared to the previous record level of funds raised in 2006 (€2.25bn).
Sources of capital in 2007 were approximately 66 per cent from within Europe and 34 per cent non-European. Fund of funds were the largest single source of funds at 23.6 per cent of the total amount raised, with pension funds next largest at 13.5 per cent, the research found. Most of the funds raised are expected to be for buy-out transactions.
Private equity investments in the CEE region reached €3.01bn in 2007, up 80 per cent from the €1.67bn invested in 2006. As expected, Poland showed the highest level of investment activity, with nearly 23 per cent of the total. Investment levels rose substantially in Bulgaria, Romania, Poland, the Baltic countries and Serbia and fell in Hungary and the Czech Republic.
Buy-outs accounted for 77 per cent of all CEE private equity investment activity in 2007 and expansion capital for 13 per cent, approximately four times the 2006 amount. Seed and start-up investments combined did not even reach one per cent of the total amount (0.9 per cent).
CEE private equity investments in 2007 were more broadly distributed among sectors than in 2006. Communications was the largest sector with 24 per cent of the total (€720m), compared to 12 per cent of total European investments in this sector. The other most attractive CEE sectors in 2007 were business and industrial products (11 per cent of total, €342m), financial services (11 per cent, €319m), transportation (ten per cent, €302m) and life sciences (ten per cent, €301m).
Exit activity in the CEE region in value terms (measured by cost of investment, not by actual proceeds) increased by 33 per cent to €586m in 2007 from €442m in 2006. Divestments by trade sale remained the most common exit route in 2007, and were proportionally much higher than in Europe as a whole.
Robert Manz, chairman of EVCA's Central and Eastern Europe Task Force and managing partner of Enterprise Investors, said, 'The CEE region continues to be highly attractive to institutional investors and private equity fund managers and, even with the strong growth in private equity activity seen in the 2007 figures, the region's potential for further development remains significant.'
'Growth figures are only part of the story,' said Mirela Ene, head of research at EVCA, 'Behind them, the activities of market players show the increasing attractiveness of the region. For example, a number of large firms are setting up offices in Central and Eastern Europe to handle local investments, which shows their commitment to the region beyond ad-hoc allocations. Last year also saw the closing of the largest ever fund dedicated to the region at €1.5bn and the sustained activity of the first half of 2008 paves the way for another great year for fundraising and investments.'
Countries monitored for this research include the Czech Republic, Poland, Hungary, Slovakia, Romania, Bulgaria, Croatia, Slovenia, Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, Latvia, Lithuania and Estonia.
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