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Comment - 10-year statistical overview

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Giampio Bracchi, President, AIFI

The Italian private equity and venture capital space has witnessed a significant evolution during the last 10 years. After a difficult start-up phase, fast growth positioned the region among the top five markets in Europe. During that period (1998-2008) the overall amount invested in Italy totalled EUR31.5bn in around 4,000 investments. With some exceptions, total investment value grew consistently over the past 10 years, from the EUR944m invested in 1998 to the EUR5.5bn invested in 2008. All these investments had a significant impact on the overall economy as they boosted its competitiveness and played an important role in the modernisation of the financial system in Italy. In fact, all research on Italian venture-backed companies has consistently shown them to outperform comparable non-backed businesses on profits and staff.

The drivers behind the growth of private equity in Italy are manifold but mainly embedded in the Italian business and industry structures. At first investors were attracted by business opportunities in new technologies and then started to focus more on mid-market companies, looking to help Italian firms resolve their typical woes: internationalisation, dimensional growth, succession issues and lack of innovation to name the most salient ones. In recent years, important national firms with internationally recognised brands have been acquired by private equity investors and subsequently increased their size and competitiveness.

Summing up the past decade, we can certainly say that the Italian private equity market is on its way to reach the levels of the main European markets. This evolution has been possible due to the quality of investment opportunities as well as the increase in the number of players. In fact, the number of AIFI members has risen from 55 in 1998 to 130 in 2008, and domestic investors have become more sophisticated, evidenced from increasing specialisation.

Services offered to private equity and venture capital players have also evolved during the last decade, providing an important contribution to the growth of the industry. Among them unquote", that has been monitoring the Italian players, supporting their activity with a constant flow of detailed information that helps all investors keep up-to-date with market developments.

Dominique Barthel, General manager, ASCRI

Spanish private equity originated in the 1970s when private investment contributed to public initiatives designed to promote industry in deprived areas. However, the real evolution of the industry has only taken place during the last 10 years: from government-backed regional and national players operating in the small-cap space, towards fully independent private equity houses focusing on the mid-market.

In 2000, we saw the appearance of big deals; international private equity players began to open offices in Spain. The boom took place in 2005. That year recorded 13 transactions above EUR100m including the two largest deals the Spanish private equity market has seen to date: the EUR4.3bn acquisition of Amadeus by BC Partners and Cinven, and the EUR2.25bn Auna buyout.

Indeed, the 2005-2008 period was the most prolific for private equity in Spain, with investment volume reaching between EUR3-4.5bn (equity) per year.

As the market matured, the investment model shifted from growth capital investments towards acquisitions, and LBOs became the protagonists of the Spanish private equity scene. Then the crisis hit. The current global economic downturn and lack of debt financing has brought leveraged transactions to a halt and we are seeing a return to the investment models of pre-boom years. That said, the downturn in these last couple of years has also helped to consolidate the sector.

Our figures for Q1-3 this year show 576 deals (down 13% from the same period last year), with 439 valued at under EUR1m. With EUR1.04bn of equity being invested during the first nine months of 2009, we expect to close the year around EUR1.5-2bn; similar to the levels seen back in 2000.

Since its early days, Southern Europe unquote" has provided great coverage of private equity in the region. With all these changes taking place, the presence of a professional media actively following the industry is essential. Congratulations on your first 10 years - keep up the good work!