Private Equity News Czech Republic: Latest Developments and Insights

Private equity is a form of investment that involves buying and selling shares in private companies. Private equity firms typically invest in companies that are not listed on public stock exchanges, with the goal of generating returns for their investors. In recent years, private equity has become an increasingly popular form of investment in the Czech Republic, with a growing number of firms looking to take advantage of the country's strong economic growth and business-friendly environment.

The private equity landscape in the Czech Republic is diverse and dynamic, with a range of firms operating in the market. Some of the key players in the Czech private equity industry include Penta Investments, Benson Oak, and Arx Equity Partners. These firms are active in a range of sectors, including healthcare, technology, and energy, and have a track record of successful investments in the Czech Republic and beyond.

Investment trends in the Czech Republic are also evolving, with a growing focus on sustainable and secure investments. Private equity firms are increasingly looking for opportunities to invest in companies that are making a positive impact on society and the environment. This trend is likely to continue in the coming years, as investors become more aware of the importance of sustainable and responsible investing.

Key Takeaways

• Private equity is becoming an increasingly popular form of investment in the Czech Republic

• Key players in the Czech private equity industry include Penta Investments, Benson Oak, and Arx Equity Partners

• Investment trends in the Czech Republic are evolving, with a growing focus on sustainable and secure investments

Private Equity Landscape in Czech Republic

Private equity is a growing industry in the Czech Republic, with increasing activity of local funds and their investment appetite in the CEE region. In 2019, the number of companies funded by private equity and venture capital (PE/VC) funds increased for the third consecutive year, confirming the trend of growing activity of local funds and their investment appetite in the CEE region. This trend continued in 2020, despite the pandemic, with several significant deals being closed.

The Czech private equity and venture capital (PE/VC) market has seen a major leap in recent years, with the number of divestments doubling year-on-year in 2018 and the volume of new funds raised from investors amounting to EUR 200 million, which was the highest figure in the past 11 years.

The industry is diverse, with funds investing in various sectors such as technology, healthcare, manufacturing, and services. The most active sectors for private equity investment in the Czech Republic are healthcare, consumer goods, and IT.

The Czech Private Equity and Venture Capital Association (CVCA) is an association representing the interests of companies active in the area of private equity and venture capital in the Czech Republic. The CVCA provides a platform for networking, knowledge sharing, and advocacy for the industry.

The private equity landscape in the Czech Republic is expected to continue to grow, with increasing interest from international investors and a favourable economic and regulatory environment. The industry is poised to play a significant role in driving economic growth and innovation in the country.

Key Players in Czech Private Equity

Private equity is a growing industry in the Czech Republic, with several key players making a significant impact on the market. Here are some of the most notable private equity firms in the country:

Genesis Capital

Genesis Capital is a leading private equity firm in the Czech Republic, with a focus on growth capital investments. They have invested in a wide range of industries, including healthcare, retail, and technology. In 2023, they invested in 3070 Group, a company dealing with complex solutions in design consultancy and manufacturing of shopper marketing solutions across Europe.

Arx Equity Partners

Arx Equity Partners is a private equity firm that specializes in investments in small and medium-sized enterprises (SMEs) in the Czech Republic and Slovakia. They have a strong focus on operational improvements and have invested in a variety of industries, including manufacturing, services, and retail.

Integral Venture Partners

Integral Venture Partners is a venture capital firm that invests in early-stage companies in the Czech Republic and other Central European countries. They have a focus on technology and have invested in companies in industries such as fintech, healthcare, and e-commerce.

Credo Ventures

Credo Ventures is a venture capital firm that invests in early-stage technology companies in Central and Eastern Europe. They have a focus on companies with global potential and have invested in companies in industries such as software, artificial intelligence, and cybersecurity.

These are just a few of the key players in the Czech private equity market. With their expertise and resources, they are helping to drive growth and innovation in the country's economy.

Investment Trends in Czech Republic

The Czech Republic has been an attractive market for foreign investors due to its geographic location, economic stability, high level of industrialisation, favourable costs, educated workforce, and advanced digitalisation. In 2019, the number of companies funded by private equity and venture capital (PE/VC) funds increased for the third consecutive year, confirming the trend of growing activity of local funds and their investment appetite in the CEE region.

According to the CVCA Private Equity Report, deal activity in the Czech Republic surpassed 2018's record, reflecting increasing opportunities in the country. The report also highlights the growth of businesses in the Czech Republic, with a mixture of local houses, pan-European and global firms executing on strong opportunities to drive investments and sales to pre-pandemic levels and even peaks.

The European Investment Bank (EIB) Investment Survey states that long-term investment support is needed to boost green and digital transformation of the Czech Republic. As part of a series of events organised to discuss current investment trends in different EU Member States, the Czech Banking Association and the EIB, in partnership with the Confederation of Industry of the Czech Republic and the Institute for Democracy & Economic Analysis (IDEA), hosted the webinar "Investment and investment finance in the Czech Republic". It focused on the need for long-term investment support to help the country achieve its green and digital transformation goals.

CzechInvest arranged 27 investment projects in 2020, with companies planning to invest CZK 15.3 billion in the Czech Republic. Two-thirds of these new investments have high value-added, which is a positive sign for the country's economic growth. The largest number of projects are in the Central Bohemia, South Moravia, and Moravia-Silesia regions.

Overall, the investment trends in the Czech Republic are positive, with increasing activity of local funds, growing businesses, and a need for long-term investment support to boost green and digital transformation.

Role of CVCA and Invest Europe

The Czech Private Equity and Venture Capital Association (CVCA) is a national association that represents the private equity and venture capital industry in the Czech Republic. Its main objective is to promote and support private equity and venture capital and its development through the elimination of administrative and legislative obstacles. The association also seeks to increase awareness about the possibilities and importance of private equity and venture capital in the Czech Republic.

CVCA is a member of Invest Europe, the association representing Europe's private equity, venture capital, and infrastructure sectors. Invest Europe promotes the interests of its members and the wider industry by advocating for policies that foster entrepreneurship, innovation, and long-term investment. It also provides education and networking opportunities for its members.

As a member of Invest Europe, CVCA benefits from access to a wide range of resources and expertise. These include research reports, training programs, and networking events. CVCA also participates in Invest Europe's policy advocacy efforts, which aim to promote a regulatory environment that supports private equity and venture capital investment in Europe.

Through its membership in Invest Europe, CVCA is part of a network of national private equity and venture capital associations across Europe. This network provides a platform for sharing best practices and collaborating on initiatives that benefit the industry as a whole.

In summary, CVCA and Invest Europe play a crucial role in promoting and supporting the private equity and venture capital industry in the Czech Republic and across Europe. Their advocacy efforts, resources, and networking opportunities benefit members and contribute to the growth and development of the industry.

Impact on Small and Medium-Sized Enterprises

Private equity has been playing an increasingly important role in the growth and success of small and medium-sized enterprises (SMEs) in the Czech Republic. Private equity firms provide capital to SMEs in exchange for a stake in the company, which can help SMEs expand their operations, enter new markets, and improve their competitiveness.

According to a report by Deloitte, the number of companies funded by private equity and venture capital funds in the Czech Republic has been increasing in recent years, indicating growing interest and investment in the SME sector. In 2019, fundraising activities generated almost EUR 100 million. Private equity investments can also help SMEs access additional financing from banks and other lenders, as private equity investments can serve as a signal of confidence in the company's prospects.

Private equity firms can also provide valuable expertise and guidance to SMEs. Many private equity firms have teams of experienced professionals who can help SMEs with strategic planning, financial management, and operational improvements. This can be particularly beneficial for SMEs that lack the resources or expertise to develop these capabilities in-house.

However, there are also potential downsides to private equity investments for SMEs. Private equity firms typically seek to maximize their returns on investment, which can sometimes lead to short-term thinking and a focus on cost-cutting measures that may not be in the best long-term interests of the SME. Additionally, private equity firms may require SMEs to take on additional debt to finance growth initiatives, which can increase financial risk for the company.

Overall, private equity investments can have a significant impact on the growth and success of SMEs in the Czech Republic. While there are potential risks and downsides to these investments, SMEs that are able to secure private equity funding can benefit from access to capital, expertise, and strategic guidance that can help them achieve their growth and expansion goals.

Involvement of Banks and Insurance Companies

Banks and insurance companies play a significant role in the private equity market in the Czech Republic. They provide financing to private equity firms and their portfolio companies, and often co-invest alongside them.

Banks are the primary source of debt financing for private equity transactions. They provide leverage to private equity firms to finance their acquisitions and help them maximize returns. Banks also offer other financial products and services, such as cash management, foreign exchange, and interest rate hedging, which can be useful to private equity firms and their portfolio companies.

Insurance companies, on the other hand, are significant investors in private equity funds. They allocate a portion of their assets under management to private equity investments, seeking higher returns than traditional fixed-income investments. Insurance companies also provide co-investment opportunities to private equity firms, which can help them diversify their portfolios and reduce their risk exposure.

Some of the major banks and insurance companies involved in the private equity market in the Czech Republic include:

• Ceska Sporitelna

• CSOB

• Komerční Banka

• Česká pojišťovna

• Generali Pojišťovna

• Allianz Pojišťovna

These institutions have a long-standing presence in the Czech Republic and have established relationships with private equity firms and their portfolio companies.

In recent years, there has been an increasing trend towards collaboration between banks, insurance companies, and private equity firms. This has resulted in the formation of joint ventures and partnerships, which have helped to drive the growth of the private equity market in the Czech Republic.

Overall, the involvement of banks and insurance companies in the private equity market in the Czech Republic has been crucial to its development. They provide essential financing and investment opportunities, which help to fuel the growth of private equity firms and their portfolio companies.

Divestments and Acquisitions

Private equity and venture capital firms in the Czech Republic have been active in both divestments and acquisitions in recent years. According to a Deloitte report, the number of divestments doubled year-on-year in 2018, and the trend has continued in subsequent years.

Several notable transactions have taken place in recent years, including the acquisition of Czech-based cybersecurity firm Avast by NortonLifeLock for $8.6 billion in 2019. This was one of the largest tech deals in European history and highlighted the attractiveness of the Czech Republic as a destination for tech investment.

In terms of divestments, private equity and venture capital firms have sold stakes in a range of portfolio companies across various sectors. For example, in 2021, private equity firm Advent International sold its stake in Czech online retailer Alza.cz to PPF Group for an undisclosed amount.

Overall, the Czech Republic continues to be an attractive destination for private equity and venture capital investment, with growing interest from global investors. This is reflected in the increasing number of acquisitions and divestments, as well as the volume of new funds raised from investors.

In summary, private equity and venture capital firms in the Czech Republic have been active in both divestments and acquisitions in recent years, with several notable transactions taking place. The Czech Republic continues to be an attractive destination for investment, with growing interest from global investors.

Resilience and Innovation in the Industry

Private equity firms in the Czech Republic have demonstrated resilience and innovation in the face of challenges brought about by the COVID-19 pandemic. Despite the pandemic's negative impact on the global economy, the industry has shown remarkable resilience and adaptability in the Czech Republic.

Many private equity firms have had to pivot their investment strategies to adapt to the changing economic landscape. For example, some firms have shifted their focus to sectors that have proven to be more resilient during the pandemic, such as healthcare, technology, and e-commerce. Others have taken advantage of the opportunities presented by the crisis, such as distressed assets and turnaround situations.

In addition, private equity firms have been innovating in other areas as well. For example, many firms have been embracing technology to improve their operations and investment processes. Some have been using data analytics and artificial intelligence to identify investment opportunities and make better investment decisions. Others have been using virtual tools to conduct due diligence and communicate with portfolio companies.

Private equity firms in the Czech Republic have also been focusing on sustainability and ESG (Environmental, Social, and Governance) issues. Many firms have been integrating ESG considerations into their investment processes and portfolio management. They recognize that ESG factors can have a significant impact on the long-term value of their investments and are therefore taking steps to mitigate risks and maximize returns.

Overall, private equity firms in the Czech Republic have shown remarkable resilience and innovation in the face of challenges brought about by the pandemic. By adapting their investment strategies, embracing technology, and focusing on sustainability and ESG issues, they have positioned themselves for long-term success.

Sustainable and Secure Investments

Private equity firms in the Czech Republic are increasingly focused on sustainable and secure investments. They are looking for opportunities to invest in companies that are committed to reducing their environmental impact and promoting social responsibility. This trend is driven by a growing awareness of the importance of sustainability and social responsibility among investors and consumers.

Private equity firms are also looking for investments that are secure and offer stable returns. They are looking for companies that have a strong financial position, a well-established market position, and a proven track record of success. This allows them to make investments that are less risky and offer more predictable returns.

One area where private equity firms are focusing on sustainable investments is renewable energy. The Czech Republic has set a target of generating 22% of its energy from renewable sources by 2020. Private equity firms are investing in companies that are developing renewable energy projects, such as wind farms and solar power plants. These investments not only promote sustainability but also offer stable returns over the long term.

Private equity firms are also investing in companies that are committed to reducing their carbon footprint. They are looking for companies that are implementing measures to reduce their energy consumption and emissions. This not only benefits the environment but also helps companies reduce their operating costs.

Another area where private equity firms are focusing on secure investments is healthcare. Private equity firms are investing in companies that provide essential healthcare services, such as hospitals, clinics, and pharmacies. These investments are secure because healthcare is an essential service that is always in demand.

In conclusion, private equity firms in the Czech Republic are increasingly focused on sustainable and secure investments. They are looking for opportunities to invest in companies that are committed to reducing their environmental impact and promoting social responsibility. They are also looking for investments that are secure and offer stable returns. This trend is driven by a growing awareness of the importance of sustainability and social responsibility among investors and consumers.

Private Equity News and Media Coverage

Private equity news in the Czech Republic is covered by a number of media outlets, including Deloitte, EY, and Private Equity News. These outlets provide regular updates on the private equity market in the country, as well as analysis and commentary on the latest trends and developments.

Deloitte's coverage of the Czech private equity and venture capital market includes reports on the growing activity of local funds and their investment appetite in the CEE region. In 2019, the number of companies funded by private equity and venture capital funds increased for the third consecutive year, confirming the trend of growing activity in the market. In 2018, the Czech private equity and venture capital market saw a major leap due to a single transaction, with the number of divestments doubling year-on-year and the volume of new funds raised from investors amounting to EUR 200 million, the highest figure in the past 11 years.

EY's latest thinking on private equity provides powerful new ways to navigate complex transformations in a way that shapes the future and unlocks innovative paths to growth and value creation. Private equity firms, portfolio companies, and investment funds face complex challenges and are under pressure to deploy capital amid changing market conditions. EY's coverage includes insights on how private equity firms can adapt to these challenges and seize new opportunities.

Private Equity News is a leading source of news and analysis for the private equity industry in Europe. The publication provides daily news updates, analysis, and commentary on the latest deals, fundraising, and trends in the industry. Private Equity News covers a range of sectors, including healthcare, technology, and energy, and provides insights on the latest regulatory developments and market trends.

Overall, the media coverage of private equity news in the Czech Republic provides investors and industry professionals with valuable insights and analysis on the latest trends and developments in the market.

The Global Perspective

Private equity is a global industry that has been growing rapidly in recent years. According to a report by EY, the total value of global private equity deals in 2020 was $595 billion, despite the COVID-19 pandemic. The United States is the largest market for private equity, accounting for over half of all global private equity deals. Europe is the second-largest market, with the United Kingdom and Germany being the most active countries.

Private equity firms in the US have been particularly active in the technology sector, with many investing in startups and early-stage companies. In Europe, private equity firms have been active in a range of sectors, including healthcare, energy, and financial services. Private equity firms in the UK have been particularly active in the consumer goods and retail sectors, while those in Germany have been active in the automotive and industrial sectors.

Poland has also been an active market for private equity, with many firms investing in the country's growing economy. In 2020, private equity deals in Poland totalled €1.5 billion, with the healthcare and technology sectors being the most active.

Private equity firms are also increasingly investing in emerging markets, such as China and India. These markets offer significant growth opportunities, but also present unique challenges, such as regulatory and political risks.

Despite the challenges, private equity firms are optimistic about the future of the industry. They believe that the industry will continue to grow as investors seek higher returns in a low-interest-rate environment. Private equity firms are also expected to play an increasingly important role in the global economy, providing capital and expertise to growing businesses.

Conclusion

The private equity and venture capital market in the Czech Republic has been growing steadily in recent years. In 2019, the number of companies funded by private equity and venture capital funds increased for the third consecutive year, according to a report by Deloitte [1]. In 2021, investors continued to back and divest high-growth businesses in the Czech Republic, with a mixture of local houses, pan-European and global firms executing on strong opportunities to drive investments and sales to pre-pandemic levels and even peaks [2].

The Czech private equity and venture capital market has also seen significant fundraising efforts in recent years. In 2018, the volume of new funds raised from investors amounted to EUR 200 million, the highest figure in the past 11 years [3].

Private equity firms, portfolio companies and investment funds face complex challenges in the current economic climate. They are under pressure to deploy capital amid unprecedented economic and geopolitical uncertainty, increased competition and rising stakeholder expectations. Successful deals depend on the ability to move faster, drive rapid and strategic growth, and create value for all stakeholders [4].

In conclusion, the private equity and venture capital market in the Czech Republic is a dynamic and growing industry. With continued investment and fundraising efforts, coupled with a focus on creating value for all stakeholders, the future looks bright for this sector.

[1] https://www2.deloitte.com/cz/en/pages/press/articles/cesky-trh-private-equity-a-venture-capital.html [2] https://www2.deloitte.com/content/dam/Deloitte/cz/Documents/finance/CVCA-Activity-Report-2021.pdf [3] https://www2.deloitte.com/cz/en/pages/press/articles/cesky-trh-private-equity-a-venture-capital-velky-skok-diky-jedne-transakci.html [4] https://www.ey.com/en_cz/private-equity

Frequently Asked Questions

What are the current trends in the private equity industry in the Czech Republic?

According to Deloitte, the private equity and venture capital (PE/VC) market in the Czech Republic has been experiencing a trend of growing activity in recent years. The number of companies funded by PE/VC funds has increased for the third consecutive year.

What is the outlook for private equity investment in the Czech Republic?

The outlook for private equity investment in the Czech Republic is positive. Deloitte reports that in 2018, the volume of new funds raised from investors amounted to EUR 200 million, which is the highest figure in the past 11 years. This indicates that investors are showing more interest in the Czech Republic as a destination for private equity investment.

How is the private equity market in the Czech Republic performing compared to other European countries?

The private equity market in the Czech Republic is performing well compared to other European countries. Deloitte reports that the Czech Republic is one of the most attractive countries for private equity investment in Central and Eastern Europe (CEE). In addition, the country has a well-developed legal and regulatory framework that supports private equity investment.

What are the key challenges facing private equity firms in the Czech Republic?

Private equity firms in the Czech Republic face several challenges. EY reports that firms are under pressure to deploy capital amid unprecedented economic and geopolitical uncertainty, increased competition, and rising stakeholder expectations. Successful deals depend on the ability to move faster, drive rapid and strategic growth, and create value for investors.

What impact are regulatory changes having on the private equity industry in the Czech Republic?

Regulatory changes are having an impact on the private equity industry in the Czech Republic. Deloitte reports that the country, region, and indeed, the wider world continue to face uncertainty with pandemic fears giving way to inflation and the war in Ukraine. This has led to increased scrutiny and regulation of the private equity industry.

What are the opportunities for private equity investment in the Czech Republic?

There are several opportunities for private equity investment in the Czech Republic. The country has a well-developed legal and regulatory framework that supports private equity investment. In addition, the country has a strong and diversified economy, with a highly skilled workforce and a strategic location in the heart of Europe. These factors make the Czech Republic an attractive destination for private equity investment.