Romania Insider

Private equity investors become more optimistic, but deals still get delayed

Private equity investors in Central Europe have become more optimistic in the last six months, but the level of deals is still a low one and contracts are signed with a delay, according to Deloitte. The PE investors' trust index in Central Europe grew to 140, from 117 in October last year, and from a historical low of 48 in October 2008.

While PE funds are more optimistic, venture funds and banks are still focusing on the due diligence process, which delays deals and affects the volume of signed deals.

“2009 was a tough year for Private Equity globally, including Central Europe. 2010 is looking much more positive – the recovery in stock markets and improved availability of debt has bolstered sentiment. There is a continuing belief among economists in the convergence effect that should see economies in Central Europe grow at a faster pace than in Western Europe over the medium term,” said Deloitte partner and M&A transaction service leader Garret Byrne.

The main challenge over the next six to 12 months will be to convert this growing optimism into completed deals that deliver value and further fuel economic recovery across the region, says Deloitte. However, one may never know what the future brings. The survey was carried out before the Greek crisis and the subsequent bailout, so the full impact of these latest challenges are yet to be measured or fully understood as to who pays and when.

“It is therefore not surprising, given the increased economic uncertainty, that private equity interest remains firmly focused on the more defensive sectors such as food & beverage and healthcare, as evidenced by recent private equity transactions in Romania: the Profi Rom Food deal, acquired by Enterprise Investors; Centrul Medical Unirea sold to Advent International; and the MedLife deal, with SGAM Eastern Europe acquiring a minority stake in the company,” said Hein van Dam, partner in charge, Financial Advisory Services Deloitte Romania.

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Romania Insider

Private equity investors become more optimistic, but deals still get delayed

Private equity investors in Central Europe have become more optimistic in the last six months, but the level of deals is still a low one and contracts are signed with a delay, according to Deloitte. The PE investors' trust index in Central Europe grew to 140, from 117 in October last year, and from a historical low of 48 in October 2008.

While PE funds are more optimistic, venture funds and banks are still focusing on the due diligence process, which delays deals and affects the volume of signed deals.

“2009 was a tough year for Private Equity globally, including Central Europe. 2010 is looking much more positive – the recovery in stock markets and improved availability of debt has bolstered sentiment. There is a continuing belief among economists in the convergence effect that should see economies in Central Europe grow at a faster pace than in Western Europe over the medium term,” said Deloitte partner and M&A transaction service leader Garret Byrne.

The main challenge over the next six to 12 months will be to convert this growing optimism into completed deals that deliver value and further fuel economic recovery across the region, says Deloitte. However, one may never know what the future brings. The survey was carried out before the Greek crisis and the subsequent bailout, so the full impact of these latest challenges are yet to be measured or fully understood as to who pays and when.

“It is therefore not surprising, given the increased economic uncertainty, that private equity interest remains firmly focused on the more defensive sectors such as food & beverage and healthcare, as evidenced by recent private equity transactions in Romania: the Profi Rom Food deal, acquired by Enterprise Investors; Centrul Medical Unirea sold to Advent International; and the MedLife deal, with SGAM Eastern Europe acquiring a minority stake in the company,” said Hein van Dam, partner in charge, Financial Advisory Services Deloitte Romania.

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