"Small and medium-sized Italian companies can no longer complain: thanks to the PIRs they are going through a magical, unrepeatable moment". Word of Anna Lambiase, CEO of Ir Top, equity markets partner of Borsa Italiana is in Milan he presented the AIM Italia Observatory, the Piazza Affari index dedicated precisely to SMEs and which has seen a real boom since the beginning of 2017, i.e. since the Individual Savings Plans came into force: index performance +23% (compared to +12% of the FtseMib), capitalization at 4 billion and above all 10 new IPOs for a total funding of 282 million euro.
To date, there are 83 listed companies, but according to Ir Top estimates there will be another 50 by the end of the year: "In six and a half months there were practically the same quotations and the same collection as the whole of 2016″, assures Lambiase recalling the merit of the PIRs, the new financial instruments introduced by the latest Stability Law, which offer considerable benefits to small investors who focus on these products which envisage that at least 70% of the portfolio is invested in Italian companies, and which at least 30% of this 70% (or 21% of the total invested) is invested in securities issued by companies not present on the main index, the Ftse Mib.
We now travel at the rate of at least one listing a week on the AIM, at the end of the year there will be more than 130 listed companies: isn't there the risk that there are too many?
“Absolutely not, the fact that there are more companies is a very positive fact and then SMEs make up the great majority of the Italian entrepreneurial fabric. If anything, their presence on the market was previously underestimated”.
Why?
“Many companies have good fundamentals, but need finance to grow. The PIRs are significantly increasing the liquidity of these companies, whose average turnover (of those already listed) is around 40 million. There are already 50 PIR compliant funds, meaning that they give the possibility to invest in Italian companies and according to our estimates this will bring 3,3 billion to the coffers of companies listed on the AIM within five years”.
Not bad, if one considers that the current total turnover of the 83 listed companies is 3,5 billion.
“Liquidity means even more solidity and the possibility of being attractive on the financial markets: even foreign investors are realizing this, usually reluctant to bet on the Italian system. There are 60 institutional investors among the shareholders of AIM companies, of which 23 are Italian and 37 foreign, i.e. 62%, a clear increase compared to July 2016. Most are European funds, in particular Swiss (18%), British ( 10%) and French (8%). There is also a share of US investors (5%)”.
Why are Italian SMEs back in fashion?
“For the excellence of Made in Italy, even the niche or luxury ones, which always attract; because the quotation itself is a great visibility tool; and because these are companies that export a lot and are therefore known abroad. And then because they are solid, after all the selection criteria are very rigorous”.
For example?
“Companies have on average revenues of 40 million and an Ebitda of 16%, even if in reality we consider a company already structured enough if its turnover is around 20-30 million and if the gross operating margin represents at least 10% of turnover. Then there are other determining factors, such as the business model and financial debt, which must not exceed a ratio of 1 to 4 with Ebitda”.
What characteristics do listed companies have and what is the trend for upcoming IPOs?
“In first place there are always digital and green companies, where green means renewables, energy efficiency, the Internet of things applied to energy. In terms of number, it can be said that one out of four companies is tech and one out of five is green, and also in terms of invested capital they are the most represented. But the real novelty of 2017 is the return of industry, of manufacturing. The Made in Italy sectors of excellence, such as agri-food, textiles, mechanics, are returning to growth and quotation”.
This will have repercussions on the real economy.
“Absolutely yes: already in 2016 employees in SMEs listed on the AIM increased by 22% to 18.000 units. With the new cash generated by the Pir and with the financial growth above all of the productive enterprises, there will also be benefits in terms of employment”.
Meanwhile, there are the financial benefits: in the first 6 months of 2017, the AIM earned 23%, almost double the FtseMib (12%).
“Above all, it should be underlined that the average daily value of the securities went from 24.000 euros in 2016 to 139.000 euros. Even if in perspective it is better that there are more IPOs rather than a great growth in share values: the first objective must be the growth of companies with all the repercussions of the case on the real economy, not the gain on the Stock Exchange. This way you really capitalize on the PIR effect”.
In your study, however, there is a negative aspect: compared to the other segments of the Stock Exchange, AIM is the one with the lowest coverage index of potentially listed companies. It means that many companies still do not turn to analysts like you and do not even consider the listing. How do you judge this data?
“It is a critical aspect, which indicates that despite the good fundamentals, there is still little financial literacy. It must be a choice of companies to contact us, even with a precise strategic and economic investment. But the data can also be interpreted positively, in the sense that there is still an underwater world to explore and grow”.
AIM already has a capitalization of 4 billion and funding that was almost 300 million in the first half of the year alone, against 360 in 2016 as a whole. It can be said that Milan is the European capital of the market dedicated to small and medium-sized enterprises ?
“Certainly yes and it is destined to grow enormously in the coming months and years. The Government has made a tailor-made intervention to support the country's entrepreneurial fabric and the move is already paying off".
