Eastern Europe’s Private Equity: A Surge in Transaction Opportunities

By Velizar Velikov, Head of M&A Database at EMIS

Private equity (PE) activity in Eastern Europe has demonstrated remarkable resilience amidst a slowdown in the overall M&A market. Recent findings from Deloitte’s recent Central Europe Private Equity Confidence Survey reveal growing optimism among financial investors as the region’s economic landscape stabilizes. The sentiment barometer has risen for the fourth consecutive semester, signaling that activity levels are poised for an uptick.

Most of respondents anticipate that current conditions will persist or foresee an improvement. This positive outlook is bolstered by the European Bank for Reconstruction and Development (EBRD), which recently revised upward its GDP growth forecast for Central Europe to 2.3% for this year, with expectations of a rise to 3.2% by 2025. Notably, the Western Balkans are also gaining traction, with growth projections increased to 3.4% for 2024. As inflation eases, real wages are rebounding swiftly, nearly aligning with pre-COVID trends, further enhancing consumer confidence.

Deloitte highlights that the easing of inflation, along with vendors adapting to a new market paradigm and a loosening of leverage conditions, is likely to invigorate the M&A market. 

Supporting this view, EMIS data indicates a rise in PE deal values in 2024, underpinned by several mega-deals despite a slight decrease in overall transactions. Traditionally regarded as a mid-market opportunity, the region recently witnessed CVC Capital Partners making its inaugural Hungarian investment by acquiring a majority stake in Partner in Pet Food from Cinven, which had sought a valuation of EUR 2bn for the asset.

Since the beginning of the year, the region has also seen significant exits, exemplified by Australia’s Macquarie Group selling a 55.2% stake in Czech gas distributor GasNet to local state-controlled utility CEZ in a deal valued at approximately EUR 3.5bn, including debt. Additionally, Macquarie divested a EUR 700mn renewable energy portfolio in Romania to Greece’s Public Power Corporation.

While the overall PE deal count has slightly dipped—primarily due to reduced investments in the IT and Internet sector—the resilient Real Estate and Construction sectors have seen a slight increase in activity, emerging as the most active area in 2024. The Wholesale and Retail sector continues to attract substantial interest from private equity investors.

In summary, the path forward looks highly promising. With improving economic conditions and growing investor confidence, Eastern Europe is on the verge of a private equity revival, offering abundant opportunities for astute investors to capitalize on.

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