Aurelius plans string of Italian acquisitions following office opening

The sponsor, which last week announced the opening of its first Italian office, is already evaluating a couple of Italian targets and could close a deal before the end of 2022, Denza said. It is conducting the due diligence with the help of unnamed legal advisers, he said.

Aurelius's acquisition strategy in Italy will be backed by its recently established Aurelius European Opportunities IV mid-market fund, which raised EUR 350m from investors along with a EUR 150m co-investment from its listed vehicle Aurelius Equity Opportunities, he said. For the time being, no ad hoc fundraises are envisaged specifically for Italy, he added.

The group expects to make around 15 investments overall with the new fund, or three or four deals per year. It does not have a specific number of deals planned for Italy, Denza said. The sponsor will target the Italian mid-market segment, in particular firms generating EUR 30m-100m in revenue, but it could also evaluate firms turning over up to EUR 1bn, Denza said.

Aurelius's first finalised deals are likely to be in the industrials sector, he said, although its M&A focus covers areas from engineering and mechanics to consumer goods and retail.

Ideal targets will be family companies looking to be guided in their growth plans, he said, adding that Aurelius sees plenty of opportunities arising on the Italian market. Valuations in its reference sectors have remained stable in the wake of the Covid-19 pandemic, he added.

The fund also aims to acquire assets from large multinational groups, as well as from Italian corporates, Denza said; the pandemic could lead to an uptick in carve-outs as companies look to restructure to address liabilities they incurred during the crisis, he added.

Aurelius is receptive to advisory pitches for its forthcoming M&A activity and has not assigned buy-side mandates yet.

The sponsor, which generally holds investments for three to five years, plans to back the operational phases of portfolio companies, implementing a buy-and-build strategy. It could also seek synergies for its sole current Italian portfolio company, Scholl Footwear, Denza added.

Although it has been watching the Italian market for some time, Aurelius decided to establish its Italian office now due to a combination of factors, Denza said. The Covid-19 pandemic in particular was a catalyst for increased dealflow in Italy, as more family businesses decided to seek support for growth.

Given the strong Italian pipeline and Aurelius's commitment to Italy, recruiting for the team has already started without a specific headcount target to reach, Denza said, adding that he will be currently supported by the pan-European team.

Aurelius was founded in 2005 as a pure turnaround investor for companies based in the DACH region and has since grown to also encompass investment areas including real estate and small-cap investments. The new Milan office is Aurelius's seventh in Europe and marks an important step in its growth strategy on the continent, Denza said.

The Aurelius group generated EUR 431.1m in EBITDA on the back of EUR 3.23bn total consolidated revenue in 2020, according to its annual report. Its portfolio companies had a total net asset value of EUR 770m as of 31 December 2020. Its market cap is around EUR 835m.

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