A record year for Italian private equity

01 May 2008

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Private equity in Italy reported a record year in 2007 with EUR4.2bn invested in more than 300 deals. According to industry body AIFI, the total amount invested by private equity and venture capital players in 2007 was the highest ever reached, 12.5% more than in 2006.

While buyouts represented more than EUR3.2bn invested (up 35% from 2006), expansion deals represented the majority (113 deals for EUR786m invested), followed by early-stage deals (88 deals, a 42% increase from 2006).

Like in the previous year, in 2007 Italian private equity continued to focus on SMEs. About 80% of deals closed in 2007 involved companies with less than 250 employees. The same companies attracted investments of more than EUR1bn, thus registering a growth in terms of both percentage (25% of total amount invested, compared with 22% in 2006), and absolute value (+29% compared with more than EUR800m in 2006).

With regards to fundraising, the total amount raised by players operating in Italy in the course of 2007 reached more than EUR3bn surpassing the EUR2.9bn raised in 2000 (a 33% increase over 2006). Foreign resources represented 57% of the total funds raised, an absolute value 86% higher than in 2006.

It is worth mentioning that there has been a significant increase of funds raised by insurance companies and from academic foundations. From a respective overall increase of 256% and 399% from the previous year, with 69% and 68% originating in Italy in each case.

With regards to exits, 2007 saw a record EUR2.6bn in divestments (calculated at cost and not including capital gains), almost doubling 2006 results. There was a total of 207 exit deals, up 14% from the 2006 figures. The main divestment strategy consisted of trade sales in number (51%) and value (40%) with an absolute value increase of 52% and 93% respectively. Secondary buyouts generated over EUR1bn (18% more than in 2006). Eleven companies were floated on the stock exchange, while the write-off incidence registered a 50% decrease in number and 59% in value; representing, 4% and 1% of the total exits respectively.

As at December 2007, the investor portfolio amounted to 1,120 companies with a value calculated at over EUR12.6bn.