Poland has invited Chinese cooperation on its shale gas drive, reports local media, as Warsaw pushes itself forward as the Asian giant's premier partner in CEE.

Poland's Deputy Prime Minister Waldemar Pawlak met with China's Minister of Industry and Information Technology, Miao Wei, in Beijing on May 30, to discuss potential cooperation in the gas and energy sectors, reports Puls Biznesu.

"We are interested in cooperating with China on the exploitation of shale gas deposits. Our research and development institutes could exchange knowledge and experience in this field," Pawlak told reporters.

Warsaw would also welcome Chinese investment in renewable energy, the newspaper said. "China has recently been developing its renewable energy sector intensively, as evidenced by its position as a world leader in solar cell production, and its position as one of the world's biggest manufacturers of wind turbines," Miao pointed out.

The news comes two days after it was reported that Bank of China plans to launch operations in Warsaw in early June. The bank will be used as a base for helping Chinese entities invest in Poland, with the priorities being infrastructure, energy and new technology.

Those are the same sectors that Chinese Premier Wen Jiabao identified as the targets when announcing a $10bn credit fund dedicated to CEE as he visited Warsaw in late April. The Bank of China added that it may also offer support to Chinese companies interested in the privatization of Polish companies.

"Europe is in a financial crisis, and the Polish economy still thrives and has been less affected by the crisis than other European countries," Wenbo Hou, general manager of Bank of China in Poland, told Pap.

"We have analyzed the Polish market for two years, we decided that the Polish economy has great potential and we want to do business here. There are also more Chinese companies that are in Poland or have plans to enter this market," he added.

Poland's push to develop its shale gas reserves kicked off a couple of years ago when it issued hundreds of exploration licences, many to US majors in a bid to harness their experience in extracting the gas. However, after initial reports suggested recoverable reserves may not be as large as estimated, Warsaw began pushing state-controlled companies to lead the charge, and some foreign investors have complained that they are being discriminated against in new tenders. The introduction of Chinese investors would make relations even more complex.

PEs’ fund-raising for the CEE region reached a significant level in 2011. Capital for CEE funds is still coming from the EU and the US but with increasing participation of global investors. Sovereign wealth funds, pension funds and family offices have all been participants in the fund of funds rush and are seeking new targets in CEE markets. There are some top PE houses that will raise new funds in 2012 as well, such as Enterprise Investors, which is seeking to raise $700 million for its eighth and newest fund.

PE transactions reached impressive levels last year, with over 40 PE deals closed in the CEE region in 2011. Poland attracted over $1.5 billion of PE investment in 2011, followed by the Czech Republic and Hungary at approximately $400 million each, and Romania and Ukraine with some $70 million each. Communication, consumer goods and retail were the key sectors of focus for PEs last year.

The year 2011 was good for investor portfolio exits throughout CEE, with the average return on investment at over 100 percent. The Warsaw Stock Exchange also saw a lot of activity, being the European leader in terms of the number of IPOs in 2011.

The CEE is also a hot spot for infrastructure projects with 500 road infrastructure projects planned for implementation. Privatization efforts are also likely to remain stable in the region this year.

The key CEE sectors with high potential for growth are: agri-food, automotive, electronics, insurance, machinery and steel, and pharmaceuticals.

2012 CEE market preview

Numerous investment funds are seeing more CEE company owners prepared to discuss a potential share or asset sale. More than 20 years since the start of CEE economies’ transformation, many local families who established busineses in the 1990s are seeking exit or external capital as well as advice on growth and expansion strategies for new markets.

Those CEE countries that are part of the EU but have kept their local currency such as Poland, Romania and Czech Republic, are likely to do the best in the coming years.

The largest chunk of this year is still ahead of us. Aggressive investors focused on deals valued at over $50 million will make their mark. Large deals already in the pipeline and many more in the works attest to the fact that the CEE market is uniquely attractive for direct investments.

We are yet to see which direction the world will go in 2012. For the time being though, CEE has the means of attracting foreign investment through easy access to the EU market and relatively low labor costs for well-qualified professionals.