The number of acquisitions involving private equity funds fell by more than 20% year-on-year in Poland to 33 deals in 2023, according to analysis by Bain & Company. The reason was the persistently high cost of capital and the uncertain macroeconomic and geopolitical situation. However, experts predict that with the expected global interest rate cuts and thanks to significant funds raised for international investments, funds may increase activity in the market this year.
According to Bain & Company estimates, last year private equity funds and their portfolio companies completed a total of 33 acquisitions in Poland. This represents a decrease from 2022, when 42 transactions were made. Among the largest investments made by financial investors in Poland were the acquisition of a minority stake in parcel machine network operator InPost by the PPF Group, the acquisition of a stake in Autostrady Wielkopolskie by French infrastructure fund Meridiam and Accel-KKR’s investment in software developer Symfonia from the Mid Europa Partners portfolio, it was reported.
“The past year has not been an easy one for the private equity market primarily due to persistently high inflation and the significant cost of raising capital. Uncertainty related to the geopolitical situation may also have prompted some international funds to reduce their activity in our region. However, the worst seems to be behind us and we expect more foreign fund involvement in our market this year,” said Bain & Company partner Paweł Szreder.
Bain & Company experts estimate that in addition to acquisitions of new assets last year, private equity funds also made around 10 exits in Poland, most of which involved the sale of companies to financial investors. Among the largest such transactions was the sale of PKP Energetyka by CVC Capital Partners, which closed this year, the exit of Abris from its investment in Velvet CARE or the sale of Dr Gerard by Bridgepoint, they also indicated.
“Poland is attracting the attention of many foreign investors, both from the industry and the private equity market. This is supported by the prospects of faster economic growth than in Western Europe and attractive opportunities for asset consolidation in many sectors. In PE fund sales transactions, on the buyers’ side we see both industry investors and other funds acquiring attractive assets with the intention of building regional champions,” Szreder added.
As Bain & Company experts emphasise, buy-and-build transactions, i.e. consolidation of selected sectors of the economy, which requires multiple acquisitions by portfolio companies, play a key role in the strategies of many private equity funds globally and in Poland. High interest rates negatively affect the benefits of such a strategy due to the increasing leverage and multiplier in valuations of acquired companies.
In the European market, the total value of company acquisitions by private equity funds almost halved last year to USD 140 billion, the weakest performance since 2016, according to a report by Bain & Company. The total number of company acquisitions made by funds in Europe fell year-on-year by 13% to 1133, with most acquisitions in 2023 in the technology and industrial sectors. At the same time, the value of funds raised for investment increased by 4% to an all-time high of USD 821 billion, it concluded.
Source: Bain & Company
