MPVenture spins out of Monte dei Paschi

Amy King
23 October 2014

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Italian mid-market private equity investor MPVenture has spun out of Monte dei Paschi di Siena bank (MPS), unquote” has learned.

Supported by secondaries player Coller Capital, which backed the spinout of Crédit Agricole Private Equity in 2012 – the move sees MPVenture gain independence from the bank, a former cornerstone investor and owner of the fund manager.

The carve-out comes as Italy's third largest bank by assets (and the world's oldest bank) continues to sell non-core assets and follows a strict cost-cutting programme.

MPS founded the management company MPVenture in 2001. In 2006-2007, secondaries players took over the bank's shareholding in the GP's first fund, a 2003 vintage with capital commitments of €100m. "We essentially managed a fund for half its lifespan as a vehicle mainly owned by international investors, albeit thanks to a secondaries transaction," says Marco Canale, managing director at MPVenture.

In the early days, the banking group held the entire share capital of the firm; however, in 2011 its stake was reduced to 48% as institutional investors entered the share capital.

The GP's second vehicle closed on €150m in 2007, with a subsequent vehicle already in the pipeline. MPVenture began raising its third vehicle in 2012, and counted MPS among its LP base at first close, but the fundraise was postponed and the bank was allowed to cancel its commitment when troubles surfaced.

For now though, the GP will focus on managing its existing portfolio and defining its future strategy. "There is no urgent need to fundraise," says Canale. "We need to understand the market niches and opportunities that have not yet been addressed by Italian GPs before we start fundraising."

Current strategies under consideration include a hybrid debt and equity vehicle. "It makes sense for hybrid instruments to increase in Italy as the banks are so cautious about lending, due to structural problems in the banking system. This has led to a huge reduction in lending, especially mid- to long-term lending," says Canale.

A second possibility is acquiring distressed companies' non-performing loans and converting them to equity. The complex strategy is currently being analysed by the GP, which is assessing market opportunities and execution issues.

MPS is not the only Italian bank to spin off its private equity activity. In September, US-based Neuberger Berman signed a preliminary agreement with Intesa SanPaolo to take over its portfolio. The buyer is understood to be developing its asset management platform in Italy.

unquote" will be discussing the latest developments in the Italian market at the 8th annual unquote" Italia Private Equity Forum in Milan on 12th November. To view the programme, click here.