Deloitte has recently posted the results of its survey of how private equity managers see central Europe.

A very concise summary of the findings of the survey is this: the PE industry expects that it will be buying CE assets in the coming months, and that it will be borrowing money in order to do so.

The Less Concise Version

In November 2017 the PE Confidence index got back to 130, which was where it had been in April 2015. It took a big drop in the summer of 2015, reaching 92 that autumn. It was at 113 in the spring of 2017. Deloitte calls the return to 130 “encouraging.”

What do the respondents to the survey think about the underlying economy in central Europe in coming months? Almost two thirds (64%) think it will remain at about the same level, 26% think it will improve, leaving a worrywart group of only 10% who expect a falling off.

That 26% who expect an improvement? That number is itself an improvement; it is up more than three-fold from a year before. The Brexit vote was still news a year before this survey, and pessimism about the risks it represented was a factor all over Europe.

What is just as impressive, the percentage of respondents who believe that leverage will be available (or, in the words of the key survey question, that debt finance will become more rather than less available) has been marching upward. In September 2016 only 7% of respondents said debt financing would increase. That number was 10% in April 2017 and was 21% in November.

Three Big Exits

Three highly successful exits this year (each involving supermarket chains) have helped get the level of confidence to this point. Mid Europa Partners sold Zabka Polska to CVC for more than €1 billion euros. Enterprise Investors sold the Romanian chain Profi Rom Food for €533 million, and Enterprise (again) also sold its position in the Polish chain Dino Polska, this time by way of an oversubscribed public offering, for €890 million.

Meanwhile, as Deloitte says, “a number of other smaller exits reaffirmed the region as a strong mid-market opportunity for creating value.”