The Romanian private equity (PE) and venture capital (VC) market significantly lags behind Central and Eastern Europe (CEE) and the entire European industry in terms of fundraising.

PE and VC funds in Romania raised a total of EUR 128.2 million between 2018 and 2021, compared to EUR 7.29 billion raised during the same period in CEE, according to the Romanian Private Equity Association (ROPEA) report for 2021 and the first half of 2022, conducted by ROPEA and Deloitte Romania, based on data provided by Invest Europe, one of the largest global associations of PE and VC, and on publicly available information.

The low volume of the local industry is mainly due to the lack of diversification of funding providers. The Romanian market is highly dependent on government agencies, including international financial institutions such as the European Investment Fund (EIF) or European Bank for Development and Reconstruction (EBRD), which represented 61% of all fundraising between 2018 and 2021, followed by family offices and private individuals (34%) and by other types of investors, such as pension funds, banks and other asset managers and sovereign wealth funds, which accounted only for 6%.

The CEE landscape is more diversified, with the government sources accounting for 39% of all fundraising between 2018 and 2021, followed by corporate investors, pension funds, banks and other asset managers and sovereign wealth funds (38%), family offices and private individuals (13%), and Fund of Funds (10%).

However, the local economy provides attractive opportunities for the existing local and regional players, according to the report.

Still, in order for the country to reach its potential in this field, it needs to develop a stronger local investor base.

The current context, marked by the recent launch of the Recovery Equity Fund, a program within the National Recovery and Resilience Program, which implies the deployment of EUR 400 million through the Funds of Funds to fund managers, is optimal for such development, the report indicates, but the successful deployment of the funds depends on the existence of co-investors, including local capital providers, such as pension funds, corporates or private individuals.

andrei@romania-insider.com

(Photo source: Romolo Tavani | Dreamstime.com)