The Southern European renaissance

Amy King
24 October 2012

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After a bleary-eyed summer, Southern European deal activity awoke last month with a notable increase in both volume and value.

Telecommunications firms stole the show in Spain, with Bain acquiring Atento, the call centre division of Spanish behemoth Telefónica, for €1.04bn, while Investindustrial and Trilantic Capital Partners bought a 48% stake in Basque telecommunications provider Euskaltel. Carlyle, CVC and Apax were also widely reported to have shown an interest in the firm.

On the fundraising front, venture investor Kibo Ventures launched a €45m fund to back internet and mobile start-ups, holding a first close on €42m, as part of a €300m network of venture capital funds led by Telefónica Digital Venture Capital.

Finally, HIG Capital jump-started Spanish dealflow with its first investment from the Madrid office; the GP acquired a 49.99% stake in Spanish audiovisual group Vértice 360 Servicios Audiovisuales for €16m.

Over on Italian soil, AXA Private Equity had a busy month, securing a 66% stake in orthopaedic devices producer Limacorporate alongside Intesa Sanpaolo, and snapping up 70% of glass containers producer Bruni Glass.

Riding an uptick in venture dealflow in the bel paese, Vertis Venture continued the stream of activity it began in the summer, backing professional networking app LinkPass with €1m. The southern Italian investor is part of a growing shift in the industry, levelling out the geographical inequality of dealflow. According to a study conducted by AIFI in conjunction with PricewaterhouseCoopers, which compared H1 2012 with the same period last year, activity in southern Italy has picked up substantially. In H1 2011, just 5% of deals took place in the south. This year though, activity has almost tripled, reaching 13%.

Even Greece returned to the buyout market, as Paine & Partners bought a 67% stake in listed irrigation solutions provider Eurodrip in a deal valued at €100m.

And it seems high-profile activity could lie on the horizon. Clessidra is reported to have made a non-binding offer for the entire business of television company Telecom Italia Media, comprising €300m of equity and €150m of debt, while the €4bn state-backed fund Fondo Strategico Italiano is preparing a non-binding offer to acquire a significant minority stake in power plant construction business Ansaldo Energia, currently owned by national engineering company Finmeccanica and US private equity firm First Reserve. Siemens had tabled a €1.3bn bid for the firm, but is understood to have refused to increase its bid and announced its intention to walk away from the negotiating table if talks continue into November.

According to research conducted by S&P Capital IQ, privately owned firms in Spain, Portugal and Italy are in better financial health than their listed counterparts. These firms, lying at the epicentre of the crisis, have better short-term liquidity and report higher revenue growth with lower leverage, the report says. From January 2008 to September 2012, Spain's IBEX 35 contracted by 47.9%, the Portuguese Psi-20 shrank by 58.9% and Italy's FTSE MIB decreased by 59.2%. It appears that private ownership is the more resilient option in times of economic turmoil.