Central European Investors’ Interest in New Opportunities Once Again on the Rise

Prague, 9 November 2009: Investors in Central Europe are becoming more positive. Following a year of significant decline in the volume of activities resulting from the economic recession, most investors have abandoned their gloomy views of the future, shifting their attention to new projects. This is one of the findings of the latest Private Equity Confidence Index issued by Deloitte. The Index reflects the attitudes of the leading investing firms in the region, including the Czech Republic.

The shift away from pessimism is confirmed by the revived focus on new investments. While the majority of respondents (55%) focused on portfolio management a year ago, the latest index indicates that 68% of survey participants are planning to devote most of their time to new investment opportunities. Many investors pay special attention to firms severely affected by the economic downturn (bankruptcy, restructuring, etc) – almost 40% of respondents showed interest in this type of investment.

In the survey carried out in April 2009, the majority of respondents (51%) assumed a further deterioration in the economic climate. In the October survey, 61% of investors anticipate the economic climate to be the same and 32% expect it to improve. Over 70% of respondents believe that in the next period the gross domestic product of Central European countries will grow at least as fast as in Western Europe.

„Optimism is growing amongst the private equity community in Central Europe. The results of our latest Private Equity Confidence Survey show that just as the decrease in confidence was dramatic, the return of a more optimistic outlook has been equally as swift,“

—Garret Byrne,
M&A Transactions Services leader for Deloitte Central Europe

„Optimism is growing amongst the private equity community in Central Europe. The results of our latest Private Equity Confidence Survey show that just as the decrease in confidence was dramatic, the return of a more optimistic outlook has been equally as swift,” said Garret Byrne, M&A Transactions Services leader for Deloitte Central Europe. However, investors should not underestimate other manifestations of the downturn. „The negative impacts of the financial crisis will continue to be felt,” noted Byrne. The survey results indicate that the vast majority of investors believe that debt availability is likely to remain restricted (only 18% expect some improvement).

Other Key Findings of the Survey:

Transaction Scope
The limited availability of loans will prevent speculative acquisitions and investors will continue to focus on medium-term goals.

Activity on the Market
After the stabilisation stage on the merger and acquisition market, investors anticipate enhanced activities on the market.

Return on Investment
The improving economic climate and revived acquisition market will provide investors with the desired framework to generate a higher return on their investments.

Investors’ Activities
The majority of the respondents indicated a tendency toward acquisitions which also relates to the anticipated enhanced activity on the market. The largest companies remain the most attractive targets for private equity funds.

For more information or to download the Deloitte Central Europe Private Equity Confidence Survey study, please go to www.deloitte.com/ce-private-equity-confidence. The study also includes a list of the largest investment transactions in the individual countries for the last period.

Deloitte’s Private Equity Confidence Index

The confidence index is based on the answers to the first seven questions in our 10-question survey by private equity professionals from the Czech Republic, Poland, Slovakia, Hungary, Romania, Moldavia, Bulgaria, Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Montenegro, Albania, Estonia, Lithuania and Latvia. The answers were provided by private equity professionals with a focus on Central Europe. For each period, we calculate the average of positive answer ratios over the sum of positive and negative answers. This average is compared to the base period, which in our case is spring 2003.

About Deloitte

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's more than 168,000 professionals are committed to becoming the standard of excellence.

Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/cz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

© 2009 Deloitte Czech Republic.