Index Bounces Back to Continue Climb
The Confidence Index has resumed its impressive climb following a sharp uptick on Winter figures to land at 133 in the latest Deloitte Central Europe Private Equity Confidence Survey.
Confidence has rebounded, continuing one of the Index’s most remarkable rises in optimism over its 20-year history.
Economic expectations often dictate the direction of the Index each semester, and sentiment is currently strong, with over half (58%) expecting conditions to remain the same and nearly a quarter (24%) expecting them to improve.
This can drive confidence in transacting, and over a quarter (28%) expect an increase in activity, while the proportion expecting a reduction in activity has reduced from 14% to 11%. The majority of respondents (61%) expect market activity to remain the same.
New investments will be supported by ample leverage, with investor confidence on liquidity at its highest in a decade: 41% expect debt availability to increase (up from 31% last time) and over half expect liquidity to remain the same (53%) for the period ahead.
"The Index’s bounce-back is a welcome return to the strong run we’ve seen for the last couple of years. It shows that in spite of ongoing uncertainty, investors in Central Europe see real opportunity to transact and have the experience to do so successfully,"
says Jan Vomacka, Deloitte Partner and Private Equity Leader.
"A number of impressive fundraises combined with growing leverage sources available in the region, from banks to alternative lenders, local and global, make the region well
capitalized for supporting growing businesses in the years to come."
Value creation will focus on operational improvements, with over a third (37%) saying this is the only reliable way to add value in today’s backdrop. While this is becoming more talked about in Western Europe as GPs grapple with dearer leverage and a dearth of arbitrage opportunities in today’s market, this has long been the main focus for the majority (55%) of CE deal-doers – unsurprising given the relatively low levels of leverage employed in transactions in CE vis-à-vis Western Europe.
