Deloitte Central European Private Equity Confidence Survey November 2012: Creating value in challenging times

Deloitte published the latest edition of Central Europe Private Equity Confidence Survey, which has tracked the changing sentiments of Central Europe’s investment community every six months for close to 10 years.

Key findings of the survey:
• The Confidence Index has been following a ‘see-saw’ pattern for two years now, this being the fourth report in a row where the positive or negative trajectory of the previous issue has been reversed
• However, the overall direction has been downwards since the post-crisis peak of 153 was reached in April 2011
• Such changes in sentiment are due to the overwhelming uncertainty of the investment environment, particularly as practitioners await some concrete outcomes of turmoil in the eurozone
• The proportion of respondents expecting a decrease in market activity over the next six months (28%) has increased substantially since April (12%), but is still nowhere near the recent high point of 12 months ago (50%)
• 76% expect no change in average transaction size
• 45% say they expect to concentrate on portfolio management rather than new investments or raising new funds.

Garret Byrne – Deloitte Partner, Private Equity Leader Central Europe said that:

It is hard to identify the primary causes of this sudden loss of confidence, mainly thanks to the sheer number of potential contributory factors. These range on the one hand from continuing fears for the key export markets of the eurozone to, on the other, doubts about the prospects for recovery in countries like the Czech Republic and Hungary and the potential for slower growth in Slovakia, Romania and even the regional powerhouse that is Poland.

Six months ago it appeared that some new confidence was emerging, with 23% of respondents anticipating improvement in the economic climate. Now the situation is changed, with nobody predicting better times ahead and 59% expecting a further decline, making this the third most negative response to this question since the survey’s launch in 2003.
The position is not quite as pessimistic as 12 months ago, however, suggesting that attitudes are fluid in the face of a fast-evolving economic situation. Deloitte believe that some recovery in the eurozone will have to be underway before any sustainable optimism emerges as exporters finally start to see prospects for growth.

Download the Central European Private Equity Confidence Survey November 2012