15 November 2022, Warsaw – Private equity in Central and Eastern Europe (“CEE”) is poised to enter a period of strong growth, overcoming geopolitical risks and macroeconomic turbulence, according to a new report prepared by Bain & Company in cooperation with PSIK and PFR Ventures. For more information, download the full report here.

Based on a survey of fund managers, the study tracks how the private equity ecosystem has developed over the past two decades and reports on how the economies of the 11 regional EU members will continue to expand faster than developed Western markets, describing how investors can benefit from this fundamental trend.

The report highlights the attractiveness of CEE as an investment destination with consistently strong macro fundamentals:

  • CEE’s consistent outperformance of Western Europe (“WE”) in economic growth will continue – Poland and Romania have forecast GDP growth of 4.2% and 5.1% respectively in 2022, versus 2.7% for the euro area.
  • GDP per capita in WE sits at €43k, versus just €14k in CEE offering significant headroom for convergence.
  • There is substantial room for further growth in investment, with private equity investment in CEE averaging just 0.2% as a proportion of GDP, compared with 0.8% in WE.
  • The region combines its attractive growth profile with developed economy-like stability, differentiating it from other emerging economies.
  • Recent geopolitical and macroeconomic turbulence is already affecting CEE economies, but the magnitude of impact will likely not differ substantially from WE.
  • In addition, CEE is growing in attractiveness, with nearly a quarter of global investors saying the region provides the best emerging market opportunities.
  • CEE remains a sizable economic region, with GDP of EUR 1.3trn, comparable in size to the Nordics and South Korea.

In addition, the business landscape has seen exponential improvements in recent years:

  • Governments are overcoming alleged barriers of bureaucracy, regulatory complexity and national fragmentation, with ease of doing business in CEE almost closing the gap to WE in the past 10 years, at 75 and 78 points, respectively.
  • Likewise, the convergence story on labor productivity continues, with CEE reducing a 58 point indexed difference with WE in 2005 to just 35 points in 2020.
  • At the same time, a well-educated and comparatively inexpensive labor force creates competitive advantage for CEE enterprises and the potential to capitalize on the nearshoring trend. Labor costs sit at €11 per hour, versus €33 in WE.
  • Accordingly, the region has seen a vast influx of multinational tech companies choosing CEE as the location of their R&D centers and hubs. CEE is home to around 6,300 multinational R&D facilities, up from 1,700 in 2010.
  • In addition, a continuous inflow of EU funding is supporting a catch-up in infrastructure vs WE, with €210bn of cohesion funding arriving between 2021-27.

The private equity and venture capital industry also continues to mature, attracting more European and global investors:

  • GPs in the region will see improving fundraising outlook due to better current and future returns on investment, according to the report.
  • The private equity ecosystem in CEE has been maturing, with all the key stakeholder groups gaining experience and the pool of opportunities widening.
  • Ever more cross-border success stories and regional champions are emerging in CEE, proving the viability of scaling businesses internationally, rather than locally.
  • The most important trends in CEE region in terms of investment opportunities are the green transition, manufacturing and services nearshoring and shift to online, as well as consolidation of a fragmented, founder-owned business landscape.
  • Disposable income growth in CEE enables the rapid growth of new consumer goods and services sectors, while the global trends of digitalization across industries and the shift to online are even more pronounced in CEE, due to the earlier stage of their advancement.
  • Meanwhile, local LPs are emerging in the CEE region, with their activity intensifying in the last five years and likely to continue growing over the coming decade.
  • On the conflict in Ukraine, CEE economies are likely to benefit in the medium term from vast opportunities to assist with reconstruction and development programs, while the direct impact of the conflict on investment funds’ existing operations has been limited.
  • In the venture capital space, the value of investments in CEE is skyrocketing, reaching around €4 .1B in 2021, making CEE the fastest-growing VC market in Europe.
  • Significantly, not only is overall funding growing, but the size of investment rounds has also expanded, and CEE is starting to become one of the most important ecosystems in Europe, with a growing number of local unicorns.
  • The region also boasts a wealth of tech talent, being home to four of the top six countries globally when ranked by the quality of software developers.

“This report demonstrates the enormously positive investment fundamentals that we see in CEE at present,” commented Małgorzata Bobrowska, president of Polish Private Equity and Venture Capital Association (PSIK). “Investors can benefit from trends within the region’s economies including support from the EU, with €584 billion of cohesion policy funding arriving in the region from 2007-2027; nearshoring of manufacturing as global companies reconsider their supply chains in the wake of Covid; and consolidation and internationalization of companies based in CEE.”

“CEE economies are growing fast as they continue catching up to the West, fueled by a highly qualified labor force, and investments in nearshoring, infrastructure and the green economy,” said Jacek Poświata, Managing Partner at Bain & Company Poland/CEE. “After developing over the past two decades, PE funds now have all the pieces in place to capitalize on that trend. VC is already booming and we expect this to continue, with investment doubling or tripling over the next four years, based on the trajectories we’ve seen in Western European economies.”

“There’s no denying that the war in neighboring Ukraine is taking its toll on PE, particularly in fundraising and exit options,” said Maciej Ćwikiewicz, president of the board, PFR Ventures which published the report alongside Bain & Co. “But there’s reason to believe this will be relatively short-lived: 86% of the people we surveyed expect the effect to fade away within one to two years. And once the war ends, they also foresee benefits for companies in the region doing business with Ukraine, particularly in the construction, industrials and business services sectors.”

Hydra Strategy
Sam Barton
+44 (0)7380 961 549


Bain & Company
Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.

Polish Private Equity and Venture Capital Association (PSIK)
PSIK gathers private equity/venture capital investors active in Poland. Its mission is to promote and develop the private equity and venture capital industry in Poland and to represent the interests of the Polish PE/VC community in Poland and abroad.
PSIK comprises 137 institutions: 43 private equity and venture capital management firms (full members) and 94 associate members—law and consulting companies, investors, and banks cooperating with the private equity and venture capital industry.

PFR Ventures
PFR Ventures is a company managing funds of funds that—together with private investors, business angels, and corporations—invests in venture capital and private equity. The objective of PFR Ventures is to use this capital to support Polish innovative companies at various stages of development. PFR Ventures currently holds a portfolio of 60 funds that have made over 550 investments.