Money Buzz! Europa

Tag: cee

  • Real estate investments down by 22% at 4.9 billion euro in CEE

    Real estate investments down by 22% at 4.9 billion euro in CEE

    At the Central and Eastern Europe (CEE) level, the investment flows are down by 22% YoY, with a total value of investment transactions worth about 4.9 billion euro in H1 2021.

    Poland remained leader in the region, with investment volumes accounting more than half of the overall CEE6 invested capital in the first semester of the year.

    Czech Republic and Hungary, with a 20% share and 10% respectively, followed, as Colliers stated in its CEE Investment Scene H1 2021 report.

    The office sector was dominant all over the region in the first semester of 2021 in terms of transactional activity, with a share of 39%% of the total volume of investments.

    It is followed by industrial and logistics spaces that are up significantly as investors diversify into this seemingly Covid-proof sector (25%) and away from retail and hospitality sectors (20%).

    Furthermore, Colliers consultants estimate that CEE 2021 year-end volumes will accelerate to reach similar levels to 2020, of around 10 billion euro.

  • Undeterred by COVID-19, dealmaking in the CEE region remained steady

    Undeterred by COVID-19, dealmaking in the CEE region remained steady

    The disruption caused by COVID-19 to CEE’s M&A market was short-lived as dealmaking returned to the fore in the second half of the year, according to Mazars.

    Deal value in the CEE region rose by 11% to €49.2bn, compared to 2019, even as volume dropped by 16% to a total of 648 transactions.

    When not including Russia, the region’s largest economy, recorded deal value figures in 2020 saw a 28% year-on-year increase.

    International buyers continue to be attracted to the region, accounting for 49% of total deal value – investing €23.9bn – in line with previous years.

    Fabrice Demarigny, global head of financial advisory at Mazars, highlights how ”on a global level, the CEE picture is one of stability. The region continues to attract a strong and steady flow of inbound investment from around the world.”

    Private equity remained extremely active in 2020, with total disclosed buyouts in the region seeing a 40% year-on-year rise to €3.9bn.

    Private equity exits also fared well, with total disclosed value coming to €8.1bn, an 11% rise in 2019.

    Four countries continue to dominate the market

    The top four countries in deal value terms remained the same as in 2019 – Russia, Poland, the Czech Republic, and Austria.

    The region’s biggest market, Russia, accounted for four of the year’s ten largest transactions.

    Meanwhile, the biggest deal of the year took place in Austria, the most affluent of the CEE markets.

    This deal saw Austrian oil company OMV increase its stake in petrochemicals company Borealis from 36% to 75% for €5.712bn.

    The tech sector flourishes amidst the pandemic

    The highest number of inbound deals to the CEE region were technology-based, hitting a total of 57 deals worth €2.5bn – a year-on-year rise of 12% by volume, and 34% by value.

    In terms of inbound deal value, energy and utilities remained in the top spot, accounting for €9.1bn – a 20% rise year on year.

  • Techcelerator launched Scale Match, the first regional matchathon

    Techcelerator launched Scale Match, the first regional matchathon

    Techcelerator expands in South-East Europe by launching Scale Match, the first regional matchathon.

    Scale Match aims to facilitate the access of high-tech startups to strategic partners in the region and investments.

    The program targets companies that develop solutions in Fintech, eHealth, companies that integrate artificial intelligence, and developers of SaaS solutions that are in the Market Ready phase.

    To be eligible, startups must have internationally scalable solutions, a sustainable business model, and an ambitious team.

    The applications are open here, until April 13, 2021, and the results will be announced on April 19, 2021.

    Up to 40 startups will be selected to enter the matchmaking program.

    Scale Match will take place online, through one-on-one sessions with investors and strategic partners.

    The program aims at companies from Romania, Bulgaria, Slovenia, Georgia, Armenia, Turkey, Albania, Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, Northern Macedonia, Serbia, Greece, Moldova.

  • Erste Group expects an economic upturn for CEE countries in 2021

    Erste Group expects an economic upturn for CEE countries in 2021

    The corona pandemic caused the CEE economies to enter into recession in 2020, although that economic contraction has turned out to be less severe than had been originally assumed.

    While the impact on Serbia was comparatively mild with a GDP decline of -1.1% in 2020, the Croatian economy plunged by -8.5% compared with 2019.

    In Austria, the GDP decline in the past year was also comparatively strong at -7.2%.

    According to preliminary data, the GDP downturn in 2020 amounted to -5.6% in the Czech Republic, -5.2% in Slovakia, -5.1% in Hungary and -3.9% in Romania.

    Erste Group sees a turnaround in 2021, with the strongest GDP growth expected in Hungary (+5.5%) and Serbia (+5.0%).

    The economies of Croatia, Romania and Slovakia should all also grow by more than 4%, with the Czech Republic very close behind with an expected rise of 3.9%.

    The GDP dynamic that some CEE countries evidenced in the final quarter of 2020 gives reason for optimism: the Hungarian, Slovak and Romanian economies unexpectedly posted growth in Q4 2020 compared with the preceding quarter.

  • 10.4 billion euro, investment volume in the 6 largest countries in Eastern Europe last year

    10.4 billion euro, investment volume in the 6 largest countries in Eastern Europe last year

    Romania almost doubled its share in the region’s turnover over the previous year and entered the big league, after Poland and the Czech Republic, but before Hungary, Slovakia and Bulgaria.

    In a year severely affected by the pandemic, in which Poland, Czech Republic and Hungary all saw year on year declines in volumes, Romania, Slovakia and Bulgaria all saw positive trends.

    Overall, volumes in 2020 declined by 24% compared to 2019 with the year closing at about 10.4 billion euro.

    Poland remained leader in the region, with investment volumes accounting for 51% of the overall CEE6 total with a total value of investment transactions worth 5.2 billion euro.

    Czech Republic followed with a 26% share, thanks to a large residential portfolio sale.

    Romania completes the top with a 8.5% share and a volume in the area of almost 900 million euro (up by about 40% over 2019).

    The transaction completed by NEPI Rockcastle, advised by Colliers, involving the sale of four office projects to AFI Europe accounted for almost a third of the local investment market in 2020.

    The office sector was dominant all over the region in 2020 in terms of transactional activity, with a share of 41% of the total volume of investments, followed by industrial and logistics spaces sector (32%) and away from the more challenged retail and hospitality sectors (12%).

    Bucharest, highest yields in the region

    Bucharest has some of the highest yields in the region for the office sector (7%), compared to at most 4.25% in Prague, 4,65% in Warsaw or 5.25% in Budapest.

    Going forward, rents will remain relatively stable, with prime headline still around 18 euros per square meter in the office sector in Bucharest (and an average in the region of 14 euro per square meter).

  • M&A activity in 2020 in CEE at the lowest levels in the past 10 years

    M&A activity in 2020 in CEE at the lowest levels in the past 10 years

    M&A activity in emerging Europe took a hit in 2020 as a result of the coronavirus pandemic with the volume of deals reaching its lowest levels in the past 10 years.

    There were 1,705 deals with a combined value of EUR 60.80bn, down by 12.9% and 16% respectively from 2019.

    In spite of the ongoing restrictions, the market showed signs of recovery towards the end of the year, producing the highest fourth-quarter deal value (EUR 24.28bn) since 2016.

    Capital markets bounce back, PE holds steady

    In what mirrored a global trend, there was a revival of investor confidence in the capital markets with 26 companies from the emerging Europe region listing for the first time, reaching a total value of EUR 4.79bn.

    This was almost double the 14 IPOs in 2019 and represents the highest number of IPOs since 2015.

    Private equity deal flow seemed to have withstood the difficult market conditions of 2020, and while cautious at times, held steady with 319 transactions (318 in 2019) and a decrease in value by 11.1% from 2019.

    The financial services sector saw the biggest jump in the number of private equity deals, up from 15 in 2019 to 33 in 2020.

    Since CMS first published the report, private equity funds have consistently grown their share of M&A in the region: in 2011, it accounted for 6% of the total volume of deals, rising to nearly one-fifth (18.7%) in 2020.

    Foreign investors cautious but regional ones defy the odds

    Foreign investors were more cautious as reflected by cross-border M&A deal numbers decreasing by 34.3% to 764 and values falling by 31.5% to EUR 35bn.

    The US remained the largest foreign investor by volume, despite a 23% drop to 94 deals, while UK investors were the second most active with 72 deals, followed by Germany with 61 deals.

    The opposite was true of domestic deal activity within countries in emerging Europe. Domestic deal numbers jumped 18.4% to 941 and 21.2% by value to EUR 25.8bn. Companies from Russia, Poland, Turkey and Czech Republic were the busiest dealmakers from within the region both in their own markets and abroad.

    Romania registered 136 transactions (as in 2016 and more than in 2018, but 7 less than in 2019), with a volume totalling EUR 2.62bn (6.9% less than in 2019). However, almost half of this value was provided by a single transaction: the sale of CEZ assets worth EUR 1.2bn.

    Leading sectors

    Telecoms & IT was the most active sector by volume with 333 deals (up from 300 in 2019) and second by value at EUR 12.97bn, driven by the rapid acceleration of digitization and adoption of digital communications caused by the pandemic.

    The sector accounted for six of the 20 largest deals in region, including the third largest of all, the EUR 3.7bn purchase of Poland’s Play Communications by France’s Iliad.

    Mining (incl oil & gas) was the top sector by value at EUR 14.1bn despite falling deal volumes. While Real Estate & Construction dropped to second place by deal volume and third by deal value, the logistics and warehousing sub-sector saw a 38.5% increase in deals (from 39 to 54) in 2020, a trend demonstrating the need to support the growth in e-commerce.

    The financial sector enjoyed 12 additional deals and a 39% rise in values, lifted by some of the region’s largest transactions including the purchase of the regional businesses of AXA by Uniqa Insurance of Austria and those of Aegon by Vienna Insurance Group.

    Country hotspots

    Poland was the only country where both deal volume and value rose in 2020 – 9.3% to 282 deals and 6.6% to EUR 11.7bn, respectively.

    The country saw two landmark deals: the EUR 3.7bn purchase of Poland’s mobile operator Play Communications by France’s Iliad which was the largest Telecoms & IT deal, and Allegro’s IPO, the biggest company to list on the Warsaw Stock Exchange.

    These figures and other findings are part of the CMS Emerging Europe M&A 2020 report.

  • Top 500 CEE largest companies aggregated turnover increased by 5.5%

    Top 500 CEE largest companies aggregated turnover increased by 5.5%

    • The aggregated turnover of the 500 largest companies in CEE increased by 5.5% to EUR 740 billion.
    • 373 listed companies (which is 74,6% of all companies compared to 79% in 2018 and 80% in 2017) recorded an increase in revenues.

    Consequently, only 25.4% recorded a stagnation or a decrease. The average turnover of the 500 largest companies increased to EUR 1,480 million, compared to EUR 1,396 million in 2018.

    Poland still leads in CEE

    Poland gained first place in both the number of companies and the turnover generated, with aggregated Polish companies’ revenues rising by 6.6%, reaching EUR 283.7 billion.

    Even though the number of Polish companies included in the CEE Top 500 ranking decreased by 12 (i.e. from 175 to 163 companies), its industrial structure remains the most diversified but none of the largest industries dominate.

    The second place belongs to the Czech Republic, with a total of 78 companies, corresponding to an aggregated turnover of EUR 115.4 billion, which increased by 2.3%.

    Hungary dropped to third place. Its total turnover, however, rose much more than the regional average as it accelerated by 6.3%.

    Pole position for automotive & transport, followed by oil & gas

    60% of the revenue generated in CEE is allocated to the largest companies, represented by three key sectors: automotive & transports, oil & gas, and non-specialized trade. The largest increase in turnover was recorded in textiles, leather, and clothing (+23.2%), and construction (+13.6%).

    The top three companies of CEE Top 500, well known from previous rankings, are Polish PKN Orlen (1st place), Czech Skoda Auto (2nd), and the multinational oil and gas company MOL Hungary (3rd).

    It is worth mentioning those companies which made a giant leap in the ranking: Polish Totalizator Sportowy (53) moved up 114 places with revenues that soared by 80%.

    Strabag Poland (197) generated 40% higher revenues compared to the previous year and gained 86 places. Bulgarian Astra Bioplant Ltd (219), a manufacturer of biodiesel fuel, moved up 155 places in the ranking with turnover increasing by 61%.

    Slovak gas transmission operator Eustream (286), with the highest improvement in the ranking, gained even 255 places as its revenues rose by 76%.

    Based solely upon the number of companies, the automotive & transport sector is once again the largest (1st place). In 2019, sales of new vehicles were weaker than in previous years but still recorded positive dynamics.

    The second place in the CEE Top 500 ranking with 89 companies (17.8%), belongs to minerals, chemicals, petroleum, plastics, and pharmaceuticals. Its turnover remains the highest in 2019 – a total of EUR 172.1 billion.

    CEE companies in the sector primarily operate in the downstream segment, i.e. the refining and processing of oil and gas. Non-specialized trade is represented by 73 companies in the current ranking (+2), which puts this sector in third position with a turnover of EUR 113 billion (+9.8%).

    The average rating score is 6.2, with the weakest companies being based in Latvia, Poland, and the Czech Republic, while the strongest ones are in Croatia and Bulgaria. 

  • CEE: Restaurants and entertainment spaces impacted by new restrictions

    CEE: Restaurants and entertainment spaces impacted by new restrictions

    New measures have been recently adopted by the governments of the Central and Eastern European countries to contain the spread of the new coronavirus.

    Wearing masks became mandatory in the crowded outdoor spaces in most countries, while gatherings allow a limited number of people, schools are functioning online only or in a hybrid model, and restaurants are allowed to trade at limited capacity.

    Czechia

    In Czech Republic, the Government ordered all non-essential shops to close and tightened other social distancing rules starting 22 October. In the past two weeks, the country registered the highest number of COVID-19 new infections since the beginning of the pandemic, and the highest in the CEE.

    In addition, restaurants in Czech malls operate only for take away orders and deliveries.

    The Government communicated its support for all affected retailers and provides a subsidy of 50% of the rent and related charges, with no subsidy requested from landlords.

    In addition, the government covers 100% of payroll costs for companies affected by the restrictions.

    Romania

    In Romania, restrictions relate to temporary closing entertainment spaces in the cities/regions where the number of infections has exceeded 3 cases/1.000 inhabitants, while indoor restaurants in such regions can only operate for take away orders and deliveries.

    This is the case in three of the Romanian biggest cities, capital Bucharest, Timisoara and Cluj-Napoca.

    Poland

    In Poland, temporary restrictions have been implemented for fitness clubs and swimming pools. In addition, from 24 October onwards, indoor restaurants will operate only for take away orders and deliveries.

    Slovakia

    In Slovakia, indoor restaurants only operate for take away orders and deliveries, while entertainment tenants temporarily suspended their activities.

    Bulgaria

    Bulgaria is introducing more restrictions as coronavirus infections remained high. In the capital Sofia, bars, clubs and discos will close for two weeks.

    The order for the temporary closure will become effective on October 25 and will be in place until November 8. 

  • Central European private equity firms hit lowest confidence level

    Central European private equity firms hit lowest confidence level

    Central Europe’s private equity (PE) firms’ confidence hits lowest level since the global financial crisis, as a result of the COVID-19 impact, but deal-doers are more optimistic than during the 2008 crisis, according to the latest Deloitte CE Private Equity Confidence Survey.

    The confidence index, which has been decreasing since the end of 2017, is now at 62, the second historical lowest after October 2008, when it reached 48.

    Seven in ten professionals in Central Europe private equity houses forecast a decline in market activity and worsening economic conditions, given that the regional economies, which are largely consumer-driven, are expecting significant GDP contraction in 2020 amid demand shrink caused by unemployment rise.

    The survey results also indicate a noteworthy proportion of believers in a quick economic recovery, as 13% of respondents actually expect conditions to improve.

    The pandemic is creating a buyers’ market, with 74% of the survey respondents believing 2020 will be a good vintage.

    Nearly half (45%) of them believe vendors have decreased their price expectations over the last six months, and over half (51%) believe they will continue to do so. As a result, the proportion of PE firms expecting to focus on new investments in the coming months remains relatively high, of 45%.

    In terms of deal sizes, most private equity houses expect them to stay the same (58%) or decrease (43%). Also, 62% of the survey respondents expect liquidity to decrease over the coming months.

    The survey results also show a steep increase in the proportion of respondents who feel the efficiency of their CE financial investments will decline, the second-highest percentage in the survey’s history, after the one reported in the autumn of 2008.

    Nearly a third (30%) expect efficiency to decline, up from just 6% in the previous survey and 0% a year ago.

  • Revolut is the fastest growing technology company in EMEA

    Revolut is the fastest growing technology company in EMEA

    Revolut is the fastest growing technology company in Europe, the Middle East, and Africa, according to the latest Deloitte EMEA Technology Fast 500 competition.

    The ranking also includes the Romanian companies Tremend, Piconet, Trencadis and Qualitance, active in fields such as software and fintech, all of them previously recognized by Deloitte’s competition dedicated to technology players with the fastest revenue growth in Central Europe, Technology Fast 50.

    “We’re delighted to top the ranking. 12 million people now use Revolut to manage and improve their finances, and our growth reinforces the point that people are looking for alternative ways to manage their money,” said Nik Storonsky, Founder and CEO of Revolut.

    The winners of the EMEA Fast 500 edition were selected based on percentage fiscal-year revenue growth from 2015 to 2018, which placed Revolut, the UK-based fintech company founded in 2015, on the leading position, with a 39,754% median revenue growth.

    The competition features winners from 22 countries, with an average growth rate of 1,258% in 2019.

    Among the Romanian companies included in the top, Tremend had a 336% average revenue growth, followed by Piconet (209%), Trencadis (167%) and Qualitance (162%).

    The Deloitte EMEA Technology Fast 500 program automatically includes companies that have been previously recognized by the Deloitte CE Fast 50 ranking, for which applications are now open.

    In order to qualify for Fast 50, companies need to have a minimum €50,000 annual operating revenue in the first three years (2016-2018) and at least €100,000 in 2019, be headquartered in Central Europe and own proprietary intellectual property or proprietary technology.

  • 53% of entrepreneurs in CEE predict revenue declines over the next 12 months

    53% of entrepreneurs in CEE predict revenue declines over the next 12 months

    More than half (53%) of Central and Eastern European (CEE) entrepreneurs predict revenue declines over the next year due to the pandemic crisis, taking into account cost-cutting measures, employee training, developing new products and expansion into other markets, according to the PwC EMEA Private Business Survey 2020 report.

    Only 7% of CEE entrepreneurs believe that their businesses will grow this year, with 36% thinking they will maintain last year’s level.

    In this context, 31% of entrepreneurs have resorted to layoffs in recent months and 5% mentioned that they could do likewise in the next 12 months.

    Ensuring liquidity has become more important than ever, with 47% of respondents indicating that improved working capital management is needed to get through the crisis period. A quarter of them have increased their use of new technologies.

    Which are the biggest threats to business development

    For CEE entrepreneurial companies, the biggest threats to business development in the coming period are: regulations, as mentioned by 82% of respondents, followed by lack of skilled employees (73%), cyber security and IT (64%), new competitors (64%) and geopolitical uncertainty (64%).

    Coronavirus was mentioned by 45% of those interviewed, level with taxation and supply-chain disruptions.

    The flexibility to respond to disruptions, including pandemics, is limited by factors such as: dependence on several suppliers and partners (62%), need to adhere to regulations (51%) and limited availability of key talent (49%).

    Instead, providing sanitary security is the main success factor in the “new normal”, say 89% of respondents, followed by the efficient use of remote work (73%) and increasing the use of new technologies (67%).

    Other factors mentioned were expanding into new markets, launching new products and services, upskilling staff and more involvement of NextGen members in decision making and management.

    Other conclusions of the survey

    • 50% of entrepreneurs inCEE expect the global economy to decline in the next 12 months, 36% believe it will remain the same and 4% that it will show a moderate improvement.
    • Regarding the business strategy for the next two years, 60% of entrepreneurs said they will continue to develop their core business.
    • 58% of entrepreneurs believe that they have managed the impact of the COVID-19 crisis as well as their main competitors, with 22% saying they have managed it better.
    • The most important measures taken for managing the COVID-19 crisis impact, but also for the future, are enabling remote work (84%), working reduced hours, mandatory use of annual leave, holidays or overtime (67%), implementation of existing crisis plans.
    • The main measures taken in a crisis, before the pandemic, were cost savings (84%), entering new markets (84%), staff training (68%) and layoffs (53%).
  • Central Europe CFOs reach pessimism peak amid uncertainty caused by the COVID-19 pandemic

    Central Europe CFOs reach pessimism peak amid uncertainty caused by the COVID-19 pandemic

    Central Europe chief financial officers have reached a pessimism peak as their confidence about the economic outlook and the wider business environment continues to fall amid the uncertainty caused by the COVID-19 pandemic, according to the latest Deloitte CE CFO Survey.

    The study was conducted on more than 300 leading finance professionals in six countries – the Czech Republic, Estonia, Latvia, Lithuania, Poland and Romania.

    Almost three quarters of the respondents (72%) stated they were less optimistic about their companies’ financial prospects than before the new coronavirus outbreak, with Polish leading the top of the pessimistic (79%), followed by Romanians (75%).

    The study also shows significant shifts in the perceived levels of uncertainty facing respondents’ businesses, considering that an average of 36% respondents felt a high level of external financial and economic uncertainty in the pre-outbreak edition of the survey, compared to almost 70%, in the latest edition.

    In this context, the majority of CFOs across all industries think that conditions in 2020 and in the beginning of 2021 will not be favourable for taking more risk in financial decisions. Romanians are at the top of the risk-averse financial leaders, with 96% of respondents, followed by Estonians (94%) and Polish (92%).

    When it comes to predictions about inflation, most of the respondents foresee growth in consumer price index in their countries, with the highest expected rates in Poland (5.2%) and in Romania (4.7%).

    The most significant threat to business over the next year in CFOs view is the reduction in domestic and foreign demand, according to the survey. As a consequence, 62% of respondents expect their companies’ revenues will decrease.

    When asked about the most appropriate ways to finance the business in the current context, CFOs see internal financing (51%) and bank borrowing (42%) as the most attractive sources of funding.