Deloitte: Almost 60% of PE funds want to focus on new investments

Among almost all private equity funds (98%) operating in Central European countries, there is a belief that market activity will increase or remain at the same level in the coming months. 59% of investors want to focus on new investments, which means a decrease of 6 percentage points. against the results of the previous survey, according to the Deloitte report. According to 41% of respondents, prices on the PE market are now noticeably higher than six months ago.

The results of the Central Europe Private Equity Confidence Survey prepared by Deloitte experts show that the rebuilding of confidence in the economic situation in Central Europe is progressing on the private equity (PE) market much faster than after the global financial crisis in 2008. This is influenced by the sector's experience gained during this time.

"The latest research conducted by the consultancy firm Deloitte shows that among the representatives of private equity funds the so-called optimism index recorded an impressive increase, from 62 points last summer to 149 points now. This result is very close to the record optimism indexes from 2007 and 2011 (respectively 159 Since November last year, there has been an almost twofold increase in the level of optimism regarding the assessment of the economic situation - as many as 70% of respondents expect it to improve in the coming months, "we read in the release dedicated to the study.

Deloitte emphasizes that for the first time since 2007, none of the respondents to the survey expect the economic conditions to worsen in the coming months, and 30% expect conditions to remain unchanged, which is a result similar to the last survey conducted at the end of 2020.

Almost all respondents (98%) expect market activity to increase (61%) or remain the same (37%). This is more by 15 percentage points. than last November. The positive attitude is on par with that of 2014. Only 2% of respondents expect a decline in market activity. This is also a significant change from 17% in winter and as much as 70% a year ago, when the pandemic was just gaining momentum, underlined.

Deloitte reported that 59% of respondents, i.e. 6 percentage points. less than in the last study predicts that he will focus on new investments, and 1/4 on managing his investment portfolio, which may mean, inter alia, operational improvements, focus on talent management or expansion into foreign markets. On the other hand, 15% of the respondents intend to collect new funds in the coming months.

According to 41% of respondents, prices on the PE market are now noticeably higher than 6 months ago. This is almost 4 times more than at the end of last year. For the first time in two years, none of the respondents believes that prices will drop, while over 2/5 of respondents expect further increases.

"This affects the plans to buy and sell. The percentage of respondents who expect to sell more than they buy in the coming months has tripled - from 6% in winter to 19% today - and the percentage of people planning to buy more than they buy in the coming months has fallen. from 72% to 57% "- we read further.

More than 1/3 of the respondents decided that companies developing at an average pace will arouse the interest of investors compared to less than 1/4 in the winter. Every tenth investor will be interested in start-ups, which is a result similar to the last few studies.

As a result of the pandemic, nearly half of the respondents (46%) record more investment opportunities, with 20% admitting that their level is similar to that of autumn 2020. Slightly more than a quarter say that they now have different investment opportunities than before the pandemic and 30% of the respondents assured that their new transaction plans are gaining momentum as they regain comfort and confidence in the market situation.

The results of the 37th edition of the Deloitte regional survey in the series "Central Europe Private Equity Confidence Survey" are the conclusions of the survey addressed to private equity investors operating in Central Europe. The survey is published cyclically twice a year, starting in 2003.

Source: Deliotte and ISBnews