unquote's Amy King speaks to AIFI president Innocenzo Cipolletta about the difficulties and opportunities in the Italian private equity market.
State-backed funds have really anchored a tumultuous indigenous market this year, and it looks like they are set to stay. "Like in other European countries, state-backed funds play an important role in this difficult moment," Cipolletta highlights. "And with a duration of 15 years, I think this will continue to play an important role."
With the majority of GPs in the audience at the unquote" Italia private equity congress in Milan citing state funds as their main competition next year, and previous concerns highlighted over an uneven playing field, these vehicles continue to spark debate.
But government funds are, of course, necessary in such economic conditions. And the government's efforts are helping to level out dealflow across the country, with a rising number of deals in Southern Italy particularly within the venture scene. While this shift has largely been welcomed, will it continue? "I think and I hope so," explains Cipolletta. "And some private funds have invested in the south of Italy, where there are good universities, and I think this trend will continue."
Turning to next year, optimism fades a little. "I think we will have a very modest recovery after this year's recession," Cipolletta suggests. "I think the main problem [for the private equity industry] will remain fundraising, particularly foreign fundraising because the euro crisis has provoked the separation of capital markets and the inflow of capital into markets under attack, like Italy, stopped and we have a problem fundraising." For the staggering 96% of GPs in the audience who revealed their intention to hit the fundraising road soon, the road could be rocky.
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