Deloitte publishes the "Italy Private Equity Confidence Survey", a six-monthly survey which provides information on the expectations of the main Italian operators on the performance of the Private Equity and Venture Capital sector.
The analysis, carried out through a questionnaire involving over fifty PE/VC companies, highlighted how this market is strongly conditioned by the persistence of the crisis. It emerges from the data collected that the pessimism of the operators increases from semester to semester, this is also underlined by Elio Milantoni, partner of Deloitte, "from the comparison between the data of the new survey and those of the second semester of 2011, in general, the expectations of the operators indicate a trend of substantially worsening of the indicators that influence the PE/VC market, characterized by a growing number of players who declare themselves more pessimistic about the evolution of the current macro-economic situation, which does not yet show signs of improvement”.
Despite an increase in the number of medium-sized transactions, operators generally expect a decline in transactions in the coming months. The concentration of 48% of the interviewees will be oriented towards the research and selection of new investment opportunities, a clear decrease compared to the previous quarter (62,2%). On the other hand, the percentage of those who will dedicate the coming months to the management of their investment portfolio (from 15,6% to 28%) and to raising capital (from 13,3% to 22%) is increasing and the number of those who they will be responsible for managing the processes for the sale of equity investments (from 8,9% to 2,0%).
As far as the most interesting targets are concerned, the one for medium-sized companies in the manufacturing sector increases to the detriment of the industrial sector. If we shift the focus to the location of investments, 52,1% of the operators analyzed opportunities mainly located in the North-West, 29,2% in the North-East, 10,4% in the Center and 4,2% in the South and in the Islands. The remaining 4,2% is instead located abroad.
Other relevant data concern a further contraction in the use of financial leverage in acquisitions and the levels of spreads on senior debt, on average, over 300 basis points. Operators increasingly cautious in resorting to external forms of financing. However, there is a preponderance of recourse to loans through Senior Debt disbursed by commercial banks and an increase in loans granted by shareholders and convertible bonds.
The trend analyzed sees a lengthening of the average holding period of the shareholdings (21,7%), a figure which is nothing more than the reaction to the reduction in returns deemed acceptable by operators and to the reduction in expectations of the divestment activity . Finally on the return objectives (Irr) of the operators: the observed trend highlights a growing number of operators with intermediate return expectations included in the 16%-20% range (rising from 35,7% to 53,2%) and 21% -25%, (substantially stable from 35,7% to 36,2%).
Attachments: cs_Deloitte_PrivateEquity_2012_0112.pdf
