New Invest Europe report spotlights innovation and development at private equity-backed companies in Central and Eastern Europe

  • EU convergence and ownership transition among trends fuelling PE investment in CEE
  • 22 companies analysed in detail, including cybersecurity and stem cell research leaders

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published ‘Private Equity in CEE: Creating Value and Continued Growth’, an in-depth study of private equity’s role in innovation and economic development across Central and Eastern Europe.

The report, whose work was led by Invest Europe’s CEE Taskforce, investigates the ongoing convergence of CEE countries with other EU regions and the investment trends that have enabled private equity to be a positive force in the region’s progress. It also highlights the industry’s role in innovation and raising ESG standards. These themes are brought to life through detailed case studies of companies backed and fully exited by private equity investors during 2015-2019.

Private equity is intertwined in the CEE landscape, investing €19 billion in almost 3,200 CEE companies between 2010 and 2019. The industry is also a significant employer and source of new jobs across the region. Private equity-backed businesses employed over 316,000 workers at the end of 2018, with companies supported by Invest Europe members increasing employment by 10.7% for the year, far ahead of the 0.7% achieved by all CEE business and outstripping all other European regions.

“Central and Eastern Europe is the fastest-growing region of Europe and presents a wealth of investment opportunities as it converges with the rest of the EU. Private equity is a valuable source of funding for businesses and plays a central role in helping companies professionalise their processes, grow and enter new markets,” said Eric de Montgolfier, CEO, Invest Europe.

Thierry Baudon, Invest Europe Chair, added: “Having spent three decades investing in Central and Eastern Europe, I have seen first-hand the entrepreneurial ideas and ambitious businesses being created across the region. With private equity backing, these companies are not only becoming world-class businesses, but are also creating jobs, improving ESG practices and driving economic growth, while at the same time delivering strong returns for investors.”

Private Equity in CEE analyses 22 companies in detail, including Bitdefender, a Romanian cybersecurity start-up that protected over 30,000 ransomware victims and helped take down one of the largest criminal dark web markets. The report also details the growth of PBKM, Europe’s leading stem cell bank, based in Poland, which increased employee numbers more than ten-fold to 339 over seven years, as well as Estonian aircraft maintenance group Magnetic MRO that entered 12 new markets under private equity ownership.

The report also identifies some of the more recent exits that have helped contribute to CEE’s success in 2020, as well as fast-growing tech companies that are helping fuel the region’s recovery from the COVID-19 crisis, including Czech cloud messaging platform Infobip and Lithuanian second-hand clothes marketplace Vinted.

It addresses the major themes influencing the investment landscape, including the catch-up in wealth between CEE economies and those in the rest of the EU, the transition from founder ownership to a professional governance structure, consolidation, and the improvement in company management and practices. It also highlights the cost advantages and high-skilled workforces available in the region.

In parallel with the publication of the report, Invest Europe will host a webinar on private equity’s role in CEE and opportunities for investment across the region on 11 February 2021 at 17:00 CET. The virtual event will involve discussion of the major themes and insight from:

Thierry Baudon, Chair, Invest Europe & Founder, Mid Europa Partners

Anne Fossemalle, Chair-Elect, Invest Europe & Director, Private Equity Funds, European Bank for Reconstruction and Development (EBRD)
William Watson, Head of the Invest Europe CEE Taskforce & Managing Partner, Value4Capital

For more information and to register for the webinar, please click here.