Offshore investments entail additional risks resulting from the limited scope for exercising direct control over the company. But is the market of origin of technology really important in the current state of globalisation of needs and problems?! Who can afford to limit themselves to the local market without considering the most promising and dynamic emerging markets? Experienced investors are aware of this and that is precisely why Poland is currently the third largest investment market in Europe. The total value of foreign investments in 2019 reached USD 21.8 billion (fDi Intelligence report).
Investing is a good idea in times of crisis!
The COVID-19 pandemic is not only an opportunity to expand your portfolio with new companies at reduced cost. We see the opportunity of COVID-19 in a different area – namely in the emergence of new market trends and their globalisation (such as: cybersecurity), the formation of new social needs and the addressing of changing consumer requirements in an innovative way.
Globalisation makes the consumer base unlimited. Today, the pace of development of technology companies has picked up while global skills and the willingness to use digital solutions have leapt forward several decades. Digital evolution is a fact.
The ZOOM application, which should be very familiar to all of us today, is a great example of this. The company is currently valued at $ 48.5 billion (April 2020) – a three-fold increase since October 2019. We can also mention the fact that in March the application had 200 million users, and in April this year – it had already reached 300 million. Compared to other industries, the company is worth as much as today the 10 largest global airlines. Until six months ago, these proportions were vastly different.
So much is changing around us today. The moment has come when a determined investor has every opportunity to be in the right place at the right time. And in good company…! In this article, we have gathered together all the information required to make the right decision.
Poland, despite COVID-19, has seen an increase in new investments even as the global market falls by 45%
Next to the question SHOULD I INVEST, or maybe divest (Warren Buffet has just sold shares in four major airlines), we should ask the question WHERE SHOULD I INVEST?!
And here Poland is an undeniable winner! It wins because despite COVID-19, new foreign investments are increasing compared to the previous year. And it wins because it takes first place among other countries that see the same growing trend with Poland leaving them far behind. You can read about this in the fDi Intelligence report, containing data that may be of interest to many investors considering a foray into overseas markets.
Figures provided by fDi Intelligence indicate that compared to 145 foreign investments made in Poland in (I-IV) 2019, in the same period of 2020 there were already 165 of them despite the COVID-19 pandemic. Interest in Poland has been growing steadily even as the top markets have been experiencing declines. According to fDi Intelligence: UK (-61%), Germany(-60%), China (-62.7%). It was Poland that broke the downward trend of foreign direct investments (FDI) caused by pandemic-induced uncertainty and a global business lockdown.
With regard to the real estate market in Poland, JONES LANG LASALLE’s report for Q1 2020 states that investor activity in Q1 2020 remained at an extremely high level and the full value of investments in this market reached EUR 1.8 billion.
According to the KPMG report (April 2020) as much as 40% of the capital invested by American companies in Europe is invested in Poland and currently, according to the estimates of the American Chamber of Commerce in Poland for 2020, this totals USD 62.7 billion.
The reasons that make Poland an interesting destination for foreign investors include a significant local market together with access to manufacturers, raw materials and subcontractors. Excellent technical education (which, incidentally, was appreciated by Microsoft who have invested $1 billion in the Polish Digital Valley) pays off with high quality innovative projects.
The exchange rate between other currencies and the Polish zloty makes investments in Polish companies an even better deal. Equally important is the professional legal service and business support offered by consultants in Poland. It is worth noting that the value of M&A transactions on the Polish market in 2019 almost doubled – to EUR 10.93 billion. Let’s just add that transactions in Poland and the Czech Republic (EUR 5.67 billion) accounted for 50% of the value of M&A transactions in Central Europe in 2019. Data from the “Emerging Europe M&A 2012/2020” report.
The world chooses Poland in the NewTech area
At present, new technologies have made their mark in the dynamic Polish economy in a big way. Many scientists and engineers enjoy successes in the field of innovative solutions (from cloud solutions, CRM systems for e-commerce support, online entertainment products, cybersecurity, AI, IoT and blockchain, through nanotechnologies, bioTech, bioMed, to process automation solutions), leaving startups from other European regions behind.
The potential of Polish engineers is evidenced by recent events in the region involving large players. Amazon and Uber opened their R&D centres in Poland. And on May 5th, Microsoft officially announced its plans concerning a $1 billion digital investment in the first data centre providing cloud services for business and administration – in Poland. In September 2019, Google presented its plans to open a cloud hub in Poland for the Central and Eastern European region.
In spite of the crises, or maybe even thanks to them, the Polish Digital Valley is seeing unprecedented prosperity. The digitisation of our lives is a fact. The concentration of technological projects and foreign investments in this industry puts Poland on the map as the third destination for incoming investments in Europe (according to the new fDi Intelligence report).
How to invest? Partnership for security
The high level of business services provides additional support for projects in the CEE region. Legal services and support for transactions involving foreign investors in Poland last year (2019) included 373 greenfield investment projects with a total worth of $ 21.8 billion. Add to this number the acquisitions and mergers of mature businesses.
In addition to M&A transactions, Polish experts also support wealthy clients who have been investing extensively on CEE markets for the last 20 years, conducting ownership supervision (known as family office services) on their behalf. Polish consulting teams are tasked with partnership and taking care of the interests of the foreign investor, often incapable of tracking their investments in all destinations. This mix of know-how and unique multi-faceted experience related to a knowledge of Eastern European culture as well as Western expectations and standards makes the entry of foreign investors into Poland today not only incredibly promising, but simply safe.
HERE and NOW, based on the cooperation of foreign investors with local consultants, there is a significant opportunity to increase the potential for finding a good enterprise for investment based on solid foundations and due diligence. Efficient conduct of the investment process and, most importantly, securing the interests of the investors on the CEE market is possible with the international experience of local consultants and their cooperation in partnership with foreign Family Office and Venture Capital enterprises or personal advisers of the investors (HNWI).
Taking advantage of the high investment potential of the Polish Digital Valley is now, more than ever, a viable option.
She has 20 years’ experience in strategic management of the development of companies, their brands and products. In years 2015-2018 she was the vice-CEO and partner of RISK Made in Warsaw. Previously, a member of the senior managing team, head of marketing and product development at coffeeheaven – co-creator of that brand’s success. She also gained relevant […]
For over 20 years, Dr. Panasiuk has combined well-honed financial, legal and business expertise with her leadership skills to lead international multiparty negotiation processes, to represent and assist private investors interested in diversifying their portfolios. While advising on new investments, she also provides assistance in controlling and supervising assets held in CEE when necessary. With […]
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