Highlights

In line with analysts’ predictions, H1 2019 showed a slowdown in private equity activity mainly due to macro-economic instability and trade wars.

Despite the political and economic uncertainties which persisted over the course of Q3 2019, Italy is perceived by investors as a very dynamic and fertile market. During the quarter, average deal value has decreased compared to both the 2018 record year and the historic value recorded over the bullish economic cycle (from 2014).  However, the number of deals has increased and the Italian market, still offers a vast number of opportunities with mid-market activity dominating the scene over mega deals.

Two recent rising trends are currently impacting deal structure in Italy:

  • The growing interest of PE funds for minority stakes; and
  • The increase in equity utilisation over debt financing.

Over the course of 2019, the Italian market has registered an increase in volume of minority stake deals with a spike in Q3 2019. In detail, only counting disclosed stake deals, more than 20 minority deals (of which almost 10 in Q3) have taken place so far in 2019 vs. about 10 for the whole of 2018. Additionally, PE funds are increasingly relying on equity for the financing of transactions, as the average spread for term loans is slightly increasing.

Additionally, the new tax incentive regulation program launched with the Decreto Crescita 2019 (Growth Decree 2019) which has also heavily impacted the PE environment. The tax benefits offered to high income individuals – combined with the numerous business opportunities – have become a driver for many sponsors to invest more in the Italian market and to open offices in the country. EQT and Hayfin launched new offices in Milan in Q3 2019.

Finally, during Q3 2019, PE funds have significantly increased their focus on fundraising. Despite a low H1 2019 compared to previous historical average, sponsors are currently seeking large sums to be deployed in the Italian territory. In February 2019, Investindustrial launched its 7th fund in the hunt for about €3 billion, while NB Renaissance is about mid-way to complete its €1 billion fundraising started in October 2018.

Consistent with the previous quarter, two of the most active sectors have been Industrials and Consumer Foods, which are both undergoing consolidation waves amid fragmented markets and are ripe for a technological overhaul.

Consumer, Leisure and Retail:

  • Lion Capital has acquired Menghi Shoes, the Italy-based shoe and plastic accessories manufacturer, from the Menghi Family, for an undisclosed consideration
  • Alpha Group has acquired M.F. Spa, an Italy-based designer and supplier of garment accessories, from Itaglobal Partners, HB2 and the Faerber family, for a consideration of €150m

Healthcare:

  • Armonia and Fidim have agreed to acquire a 69.65% stake in BioDue, the listed Italy-based company engaged in the development, manufacture and supply of medical devices, skin cosmetics and dietary supplements, from Mr Vanni Benedetti, Mr Ruffo Benedetti and Mr Guasti, for a consideration of €79.5m

Industrial Products & Services:

  • Ambienta has acquired Amutec, the Italy-based manufacturer of machines for the production of plastic bags, from the company founder, Luciano Conti, for a consideration of €90m
  • Oaktree Capital has agreed to acquire a majority stake in Cebat, the Italy-based company active in the installation and maintenance of high voltage underground cables, electricity distribution networks and water distribution networks, from the Montanari family, for an undisclosed consideration
  • Alvarez & Marsal Capital has acquired La Patria, an Italy-based provider of surveillance installations, security cameras, alarms, motion sensors and detection systems, for an undisclosed consideration

Services:

  • CVC has acquired a 50% stake in Multiversity, an Italy-based holding company that provides online courses for the Universities of Telematica Pegaso and Mercatorum, for an undisclosed consideration

TMT:

  • Livia Group has acquired a majority stake in Fujitsu Technology Solutions, the Italy-based ICT company, for an undisclosed consideration