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Eastern Europe Private Equity Transaction Outlook Improves, Deloitte Says

Date: Wednesday, June 9, 2010
Author: Bloomberg

A recovery in stock markets and improved access to credit will help bolster sentiment for private-equity transactions in central and eastern Europe this year, a Deloitte & Touche LLP survey found.

Better access to debt made buyout firms more confident about pursuing deals, mainly in defensive sectors such as food and drink, manufacturing and health-care industries, Deloitte said. Some 65 percent of respondents, the highest level since 2003, expect mergers and acquisitions to increase in the region in the next six months.

“2010 is looking much more positive,” Deloitte Partner Garret Byrne said in the report. A belief among economists that the region should grow faster than western Europe has led to “increased interest in doing deals but we are still nowhere near the levels being completed two or three years ago.”

Central and eastern Europe’s export-driven economies sank into recession in 2009 when the global credit crisis plunged the euro area into its worst contraction since World War II.

Deloitte’s survey, published today, was done in the first months of 2010 before the Greek fiscal crisis and included more than 20 largest private equity firms operating in Poland, the Baltics, the Czech Republic, the Balkans and other eastern and central European countries.

In particular, the Czech government expects economic growth of 1.3 percent this year, after a 4.1 percent contraction in 2009, on improved demand for exports, which account for about 70 percent of gross domestic product.

Sales to strategic investors continue to be the most likely exit routes. Secondary sales to private equity also may be “realistic” options, the survey showed.