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Italy sees record in buy-out activity in 2002 while early-stage declines

Italian buy-out activity reached record levels in 2002 both by value and number of deals, while seed and early-stage investments witnessed a steep decline, according to figures just released by the Italian private equity association AIFI.

Buy-out deals worth E1.6bn accounted for a record 59 per cent of Italy's private equity activity in 2002. By contrast, the value of capital invested in seed and start up deals fell dramatically from E291m in 2001 to just E65m last year.

Italian private equity investments totalled E2.6bn in 2002, representing a 20 per cent increase on the previous year. But the number of deals carried out fell from 489 deals in 2001 to 301 deals in 2002.

‘In comparison with preliminary figures of other European markets, the Italian 20 per cent increase in invested amounts is sound well above the average increase recorded in continental Europe, which is up by 11 per cent,' said Marco Vitale, AIFI president. ‘This figure expresses the vitality of our industry and its readiness to react in poor economic conditions,' he added.

The Italian manufacturing sector, consumer goods and industrial products and services benefited most from the increase in private equity investment. But technology firms saw a steep decline in investment activity with a 56 per cent fall in the number of deals taking place and a 69 per cent fall in the value of those transactions.

Exits were down on the previous year. Italy saw 143 exits worth a total of E589m in 2002, a decrease of four per cent and 35 per cent respectively on 2001 figures. Trade sales remain the most common exit route in Italy, accounting for 39 per cent of sales and 52 per cent of exit value. Reflecting the global slowdown in financial markets, IPOs remained scarce accounting for just eight per cent of all exits and write offs accounted for a sizeable 34 per cent.

In contrast to many other markets, Italy's fundraising activity rose in 2002. The total amount raised was E2bn, a six per cent increase from 2001.

Italy's private equity market looks set to remain buoyant in 2003. It has attracted interest from both sides of the Atlantic in the first quarter of the year. Carlyle Group, Barclays Private Equity, Blackstone Group, Permira, and CVC Capital Partners, are just some of the private equity players that have been moving in on Italian opportunities in recent months.

Early signs for fundraising in 2003 also look good with the launch of the second Opera fund and an impressive second closing from B&S Group which exceeded its E500m target in just seven months.

Copyright © 2001 AltAssets