Abstract
When we speak about Central and Eastern Europe (CEE) as a private equity market, we speak about the countries of the former Eastern bloc. From a private equity investor’s point of view, the region comprises two major markets with distinct characteristics and risk profiles. On the one hand, there are the Central and Eastern European countries, which are today members of the European Union (EU): Poland, the Czech Republic, Slovakia, Slovenia, Hungary, and the three Baltic states, which are EU members since 2004, and Bulgaria and Romania, which joined the EU in 2007. On the other hand, there is Russia and the other former Soviet Republics or members of the former Commonwealth of Independent States, often referred to as “CIS countries.” CEE and CIS are separate and distinct private equity markets for a number of reasons: there is a different type of private equity opportunity available in each of the markets, there is a different universe of fund managers operating in each of the markets, and the risk/return profile of private equity investing in the two markets is different. In short, while the private equity opportunity in Russia/ CIS continues to be an emerging market opportunity, CEE is an “emerged market” today. A closer look reveals that the private equity opportunity in CEE indeed combines emerging market characteristics and developed market characteristics in a very unique way, which I will further examine in the following sections.
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