Italian private equity remains steadfast against the winds of the global crisis. This is certified by a report published by the Italian law firm Gatti Pavesi Bianchi (GPB), according to which in particular buyout operations remain stable in Italy despite the current difficult economic conditions. The study shows how, after the record activity recorded in 2018, the value of deals in the first three quarters of 2019 however dropped to 9,5 billion (compared to 18,6 billion recorded in the same period of 2018), while the volume increased by 2,6%, from 114 to 117 deals.
Repeating 2018, the most prosperous year ever recorded by the Italian private equity market, would have been a difficult undertaking, but 2019 was however up to the challenge. The first three quarters, according to GPB, held up well in terms of deal volume, recording a slightly higher number of transactions than that recorded in the same period of 2018.
The Italian private equity market has remained robust at a time of growing global challenges and economic growth in Italy has remained slow. Debt, public and private, is still worrying, as Stefano Valerio equity partner of Gatti Pavesi Bianchi observes: “Public debt, which stands at around 135% of GDP, remains stubbornly high, second only to Greece among EU member states. The fact remains, however, that investment funds have dry powder to invest and that Italian companies remain attractive. Looking forward to 2020, Italy's strengths – such as world-renowned design and manufacturing and a long track record in exporting – make the country an attractive destination for buyout operations.”
Here are some key takeaways from the report:
• Megadeals are on the decline. While the three largest deals recorded in 2018, all three of over €1 billion, exceeded a combined value of €9 billion, this year the three largest deals reached an aggregate value of just €2,9 billion of Euro. The decrease in megadeals seen in Italy is a trend that is also present in the rest of Europe.
• Family businesses continue. Three of the five largest private equity deals recorded in the first nine months of 2019 involved family-owned businesses, including Carlyle's €1 billion purchase of the Forgital group.
• Three sectors dominated the market in Italy: consumer goods, industry and healthcare. In terms of volume, the consumer goods and manufacturing sectors attracted more than half of all transactions recorded between 2018 and 2019. In terms of value, however, the healthcare sector recorded the largest share, with almost a third ( 29%) of investments between 2018 and 2019.
• M&A activity follows the trend of the PE: the volume of deals is stable while the value is decreasing. The number of deals held up well in 2019, with 444 transactions registered during the first three quarters of the year compared to 480 deals in the same period of the previous year. However, as in private equity, the total recorded value decreased from €44 billion in the first three quarters of 2018 to €24,9 billion in the same period of 2019.
