Central and Eastern Europe is looking increasingly attractive to Chinese investors.
The news that Invitel, Hungary’s leading alternative telco, is to be bought by the China-CEE Fund is certainly an important development. Though overshadowed by Magyar Telekom, UPC and Digi, Invitel is a key player in the Hungarian pay-TV industry, claiming a market share of almost 5%. It also accounts for almost 13% of the fixed voice and around 9.5% of the fixed internet sectors respectively.
By acquiring Invitel, the China-CEE Fund will be gaining a foothold in the region’s TV industry and further deals could well be in the offing.
China-CEE Fund was itself established by China Exim Bank, in partnership with other CEE institutional investors and with the aim of capitalising on investment opportunities in the region.
Although this marks its first foray into TV it will not be the first time it has worked with Mid Europa Partners (MEP), Invitel’s owners. In January 2016, for instance, it invested in the Czech utility company Energy 21, which MEP had backed since 2010.
The China-CEE Fund has committed funds of $435 million and is advised by CEE Equity Partners. It forms part of a wider economic cooperation between China and CEE that is focused on improving the latter’s infrastructure and is gathering momentum. Indeed, bilateral trade between the two amounted to $43 billion in the first nine months of 2016, or 4% more than in the same period a year earlier. At the same time, Chinese investment in the CEE region increased by nearly 90%.
News of the Invitel deal has come as doubts emerge about the acquisition of Spacecom by China’s Beijing Xinwei Technology Group. Though not a CEE company, Spacecom plays an important role in the region’s TV industry and could still end up in Chinese hands if talks between the two parties reach a successful conclusion.