Italian PE back in fashion

Unquote and Gatti Pavesi Bianchi
05 July 2018

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In the first edition of Gatti Pavesi Bianchi's new series on the M&A and private equity markets, partners Gianni Martoglia, Carlo Pavesi and Stefano Valerio explored how family businesses, foreign interest and fertile fundraising are boosting Italian private equity

The Italian private equity industry had to negotiate a volatile period in 2017. Although the number of private-equity-backed deals in Italy held steady, matching 2016's total of 100 deals, value was down 47% year-on-year to €7.6bn, according to Unquote Data.

The fall in deal value last year, however, obscures the fact that the Italian private equity market is actually in a healthy position. Despite the drop-off in 2017, total value last year is still almost double that of the €4.1bn worth of deals closed in 2012. Total Italian private equity deal value has in fact climbed every year between 2012 and 2016, when a record €14.3bn of private-equity-backed deals were done. It is also notable that the €7.6bn posted last year represents the third best year since the financial crisis.

The outlook is certainly positive after a strong start to the year for Italian private equity in 2018. The first quarter of 2018 ranks as the strongest Q1 for Italian private equity deal activity in terms of both deal volume and value since Unquote records began. Notably, by the end of Q1, total deal value had already surpassed the halfway mark of 2017's total deal value and matched a third of 2017's total deal volume.

A further sign of private equity's confidence in Italy is the fact that firms have been willing to deploy larger sums into bigger deals. There was a higher volume of larger-scale private equity-backed deals than in any previous year and relatively fewer smaller-scale deals.

Overall, it seems that the upward trend that started in 2016 and 2017 has continued into 2018 and a slowdown seems unlikely. However, it is worth noting that, despite the formation of a government, the political uncertainty that remains in the country could mean that foreign backers begin to reduce their investments in Italy. Nevertheless, a combination of factors have supported private equity's strong performance in Italy.

To read more about these factors click here for the full report.