The Covid-19 pandemic could strengthen the position of private equity funds in Central Europe. The funds themselves reacted quite calmly to the pandemic, for many of them it is an opportunity to invest in companies that will now seek investors, according to a report by the consulting firm Deloitte. Approx. 75 percent of respondents believe that it will be a good year for the private equity market. At the same time, more than 2/3 of representatives of private equity funds in Central Europe forecast that the economic situation will worsen in the coming months, and the optimism index has reached the lowest level since 2008.
According to Deloitte, the private equity market in Central Europe, while feeling the impact of Covid-19, is characterized by greater optimism than during the global financial crisis of 2008.
"Given the continuing uncertainty around the markets and the question mark over the further course of the coronavirus pandemic, we can hypothesize that the current sentiment is based on one factor that was not present in 2008: experience. The crisis of 2008 was the first that most funds in Central Europe ever experienced. Since then, investment specialists have accumulated significant knowledge and competences, thanks to which they will be able to better find themselves in the coming months,” Mark Jung, partner in the financial advisory department, leader of Private Equity in Central Europe, Deloitte, said.
This experience is likely to increase the level of investment and create a solid basis for entering into new deals. However, this does not change the fact that the so-called the optimism index is at the lowest level since 2008. It is now 62.25 points less than six months ago, which is before the pandemic started. For comparison, in 2008, the optimism index was 48 points. These are the two lowest readings in the study's 17-year history.