The investment funds active in Romania are more optimistic about the evolution of the local market in 2024 compared to the previous year, according to Roland Berger’s Private Equity Outlook 2024. More than 70% of the respondents in the survey anticipate an increase in the number of transactions made by investment funds in Romania, after 2023 saw 20 transactions, 13 acquisitions and seven exits.

Close to 2,200 industry representatives at the European level were asked to participate in the survey. In Romania, more than 80% of the funds active in the local market took part in the survey, while in CEE, more than 50% did.

The outlook on the 2024 macroeconomic climate in the private equity industry varies according to the region. The report showed that 73% of the respondents in Romania expect to see economic growth this year, while in the CEE, 63% share this expectation. In Western Europe, 33% of the respondents expect to see economic growth this year, with more optimistic expectations in France, the UK, and the Northern countries, while experts in Germany, Portugal, and Spain are more cautious. 

Still, private equity professionals are confident in the evolution of the market this year and anticipate an increase in the number of transactions made by investment funds this year. This is a marked change compared to the 2023 sentiment, especially in Western and Central and Eastern Europe, the report notes.

In Romania, the share of funds anticipating an increase in the number of transactions increased from 50% in 2023 to 70% in 2024.

The availability of attractive targets and the potential acquisition price will impact the number of transactions made by private equity funds in Romania this year, according to the survey participants. Meanwhile, the macroeconomic context and consumer trust are expected to impact the dynamic of private equity transactions in CEE, while the availability of debt financing will be more relevant in Western Europe. 

“We are glad to see an increase in optimism about the private equity market in Romania. Two-thirds of the professionals in the industry expect the targets available in 2024 to be more attractive than last year, and implicitly, the number of transactions carried out this year will be higher. This optimism is similar at the European level. The highest increase in optimism levels is recorded in Western Europe, where the market of mergers and acquisitions, including those by private equity funds, was strongly impacted last year,” Szabolcs Nemes, Managing Partner, Roland Berger Romania, explained.

Industry professionals expect the consumer goods and retail sectors to attract most private equity investments in Romania this year, followed by logistics and services. The IT, software and digital solutions sector and the medical services are on par in third place this year, after taking up the first two positions last year.

“The investments planned for 2024 will focus on the industries already holding a significant share in the funds’ local portfolios. At the end of 2023, the four main sectors accounted for 75% of the total turnover of the companies in the private equity portfolio in the country,” Szabolcs Nemes added.

As the local private equity market is at a different stage compared to other countries in Europe, the priorities of the players for the current year are different, concerning both the focus and the measures planned for the medium term to increase the value of the portfolio.

“The portfolios of the investment funds are 40% made up of companies that have been under their management for more than five years, and more than 10% of the companies have been owned by these funds for more than a decade,” the managing partner explains.

“It comes as no surprise that close to half of the respondents in Romania are interested in an exit this year. In CEE, more than 70% of the funds taking part in the survey anticipate an exit this year. At the same time, we see an increased interest in Romania in raising funds, compared to the previous year and with other countries in Europe. This is supported by the PNRR funding program and the emergence of new funds locally recently,” Nemes added.

Developing the companies in their portfolio is a priority for all investment funds, regardless of geographical location. The measures taken locally are similar to the ones in the rest of Europe, with a focus on consolidating, cost-cutting, and digitalization. 

(Opening photo: Designer491 | Dreamstime.com)

simona@romania-insider.com