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Index ties record for longest confidence climb as Central Europe Private Equity professionals reveal optimism for 2024

The Confidence Index has climbed for three consecutive semesters, only the third time in the Survey’s 20+ year history that it has risen so steadily. Positive sentiment around the economy supports confidence in a strong vintage as liquidity returns, according to the latest Deloitte Central Europe Private Equity Confidence Survey.

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The latest barometer of deal-doing sentiment in Central Europe shows continued and growing confidence, with an increase in the proportion of respondents feeling 2024 will prove a good year for returns (86%, up from three-quarters previously) as the Index climbed steadily for the third
semester in a row. The increase is less steep than the Survey’s other two
prolonged climbs which followed the 2008 and 2012 downturns.

Respondents are more upbeat about the economy, with a near tripling of those expecting conditions to improve to 42%. Equally encouraging is a halving of those expecting the backdrop to worsen (to 20%, down from 40% in Summer 2023). Liquidity may also be returning, with nearly a third of respondents (29%) expecting debt availability to improve, more than double our last Survey.

Such sentiment is driving confidence around market activity, with half of respondents  (49%) expecting transaction volume to increase in 2024, double last semester’s proportion and up from a low of just 6% in Summer 2022. Furthermore, only 14% expect a decrease in activity, down from a third last semester. Pipelines are looking healthier too, with nearly half of respondents (45%) feeling there are more actionable opportunities now than three months ago.

It is great to see confidence making a firm comeback after a protracted period of extraordinary difficulty. That the growth in optimism is more measured than in the other periods of the Survey’s sustained growth is # a testament to CE’s experienced deal-doers, who can draw on previous cycles to apply more pragmatism to today’s backdrop,

                                                                               says Jan Brabec, Deloitte Partner and Private Equity Leader.

Cautious confidence is reassuring and suggests that transactions this year will be done thoughtfully with flexible funding suited to maintaining much-needed agility in the region’s fast-growing companies.

ESG is becoming more firmly embraced in the region, with three-fifths of respondents starting to develop future commitments and targets toward climate neutrality (42%) or having already implemented such policies (18%).

It is clear that private equity firms in Central Europe are embracing ESG as a value driver, as yesterday’s advice becomes today’s legislation and valuations are impacted by sustainability and inclusion efforts. Experienced private equity firms have insights to share in this vital space, and have a clear role to play in leading by example,

says Irena Pichola, Global Government & Public Services Climate Action and Sustainability Lead for Deloitte Central Europe.