Europe’s most promising market

CEE punched above its weight in 2009. Kimberly Romaine comments.

Last year was a tough one for all private equity markets, but Central & Eastern Europe (CEE) has emerged stronger. The region saw its portion of all European private equity increase as other markets fell further, and many non-local players retrenched home to batten down the hatches. The aftermath is reminiscent of the one enjoyed by local trailblazers seven years ago, when they ruled the CEE roost nearly exclusively, though today more sophisticated financing is available.

Last year came in like a lamb (headed for slaughter) and went out like a lion: Q1 was conspicuously quiet, across all of Europe, but Q4 saw a handful of mega deals. The second largest was CVC's EUR 1.53bn buyout of AB InBev's CEE operations, propelling CEE's deal total to EUR 3.2bn, an impressive 65% increase on the previous year. Even stripping out the mega-deal, CEE's largest since the 2007 EUR 1.67bn BTC secondary buyout, would have seen the region maintain pace on 2008's total - itself a feat when one considers the UK's freefall, which saw value totals down by 77%. Notably, the year ended with two take-privates from the Warsaw Stock Exchange - a relatively new phenomenon in CEE but one that sees it adopting the types of deals that have allowed global GPs to reap generous returns in other markets.

These developments were achieved against a backdrop of relatively favourable macroeconomic conditions. True, a handful of countries faced well-publicised bail-outs, however equally important though less touted were the new euro joiners - namely Slovenia and Slovakia. Also impressive was the fact that Poland was among the few EU countries not to have slipped into recession in 2009, leading many to call it Europe's most attractive market for deal doing.

We look forward to discussing this and other topics at the fourth annual CEE unquote" Private Equity Congress on 20 May in London. www.ceepecongress.com.
Kimberly Romaine