unquote" hosts first Milan congress

01 January 2008

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Southern Europe unquote" held its first congress at the Le Meridien Gallia in Milan on 20 November 2007. The event brought together more than 120 GPs, LPs, advisers, academics and lawyers from Italy and abroad to discuss crucial issues for the asset class in the aftermath of the debt woes.

The congress was inaugurated by chairperson Mara Caverni of PricewaterhouseCoopers - sponsors of the event - who introduced a keynote address by Anna Gervasoni of AIFI. Gervasoni discussed the performance of the Italian market and also commented on the outcome of trade body's efforts alongside the Government to improve the conditions for private equity deal doing in Italy.

In the first panel of the day, buyout houses Clessidra, Candover, Apax Partners, Advent International; Private Equity Partners and Giovanni Burani, CEO of fashion group Mariella Burani discussed the challenges faced by the LBO industry. During the debate, it was said that in a market where auctions are hard to escape, thorough vendor due diligence is performing an important role in pre-empting competitive processes. Additionally, Burani mentioned that the luxury brand segment will remain a rich source of dealflow for industrials and private equity firms. He commented that abundance of targets in the SME layer, coupled with intensive consolidation strategies make it easier for businesses such as his own to avoid auctions involving private equity. "As soon as we see a GP competing for a deal, we give it a miss," said Burani. The investors agreed that sector specialisation is a must. "The days of being a generalist are over," said John Singer of Advent. In the same panel, Aldo Maccari of Candover said that "it is time for Italy to become a buyer country rather than just offering targets". He was echoed by Burani, who reiterated the importance of creating a strong presence abroad by exploiting the "made in Italy" concept.

A panel on the performance of the Italian fundraising industry followed. Although the participants from Allianz, IdeA Capital, State Street Global Investments and Cape-Natixis agreed the fundraising environment has improved dramatically in the past couple of years, it was pointed out that there are still challenges to be overcome, such as regulatory hurdles and LP professionalism. The panel on secondaries commented on the difficulties related to the lack of information from the community about the secondary market. Transparency is the major constraint, as well as the limited dealflow and "unfriendly and unhelpful" attitude of GPs towards secondary firms, as described as by Jody Vender of Value Secondary Investments.

Paolo Gesess of 360 Capital Partners started the afternoon sessions with a presentation on his firm's activity. The venture firm received 327 business plans in 2006, 178 of which were analysed, nine are currently undergoing due diligence and one deal has been closed. His presentation was followed by a case study presented by Alessandro Fracassi, CEO of online mortgage broker MutuiOnline, which was taken public by 360 Capital Partners in 2007.

The same afternoon, the current situation of the debt market was discussed by Philippe Minard of Mezzanove Capital and Fabrizio Bonelli of Societe Generale, moderated by Claudio Zara, SDA Bocconi School of Management. The participants agreed that the debt woes have also reached Italy, although players active in the mid-market remain largely unaffected. The current banking consolidation taking place in Italy was pointed to as a possible threat to buyout financing, as there will be limited scope for syndication. This panel was followed by Ashurst's legislation and regulation focus, which highlighted the concerns surrounding MiFID, among other fiscal and legal matters.

A presentation by Paolo Scarlatti of special situations fund Orlando Italy followed, with the GP discussing the main opportunities and pitfalls of his area of expertise. Caverni, who had previously introduced the various panels and their respective facilitators then moderated the M&A panel, which saw the participation of Raffaele Cestari, of PricewaterhouseCoopers, Alberto Regazzo, of Bain & Co, Alioscia Berto, of Doughty Hanson and Giuseppe Prestia of Charterhouse Capital. The discussion focused on risk assessment abroad, as well as viability and monitoring of synergies and the role of cross-border shared services centres in rationalising operations. The conference ended with a focus on cross-border investments Italy-China and the rationale behind bridge fund Mandarin Capital Partners, presented by Enrico Ricotta, a senior partner at the same firm.

The event was very well received by the local press and the investment community, which supported the event by attending and interacting with the panel's speakers. We would like to thank all of our sponsors - PricewaterhouseCoopers, IKB Deutsche Industriebank, Fineurop Soditic, 360 Capital Partners and Ashurst - and supporting associations and delegates.