On 13 September, data on the Italian private equity and venture capital market in the first half of 2021 were presented; the results of the analysis conducted by AIFI, in collaboration with PwC Deals, show that the first half of the year recorded total inflows (on the market and captive, i.e. from the parent company) of €2,827 million, an increase of 194% compared to the first half of 2020, thanks to a number of significant closures. The main sources of funding were: pension funds and social security funds, 35%; banks, 16%; and the public sector, 10%. Geographically, 95% of the capital came from domestic investors, while with regard to the investment target, 42% of the capital is expected to be invested in infrastructure and 41% in buyouts.
The importance of investors in the post-Covid recovery
"The recovery of the economy also sees the contribution of private equity, which, with the growth of investments and operations, especially expansion, demonstrates the importance of the role played by investors even at this delicate time," says Innocenzo Cipolletta, President of AIFI. "However, more action is needed to attract Italian and international capital to multiply the opportunities for our companies".
The one that has just ended is among the best half-years also in terms of investments. The amount invested was €4.5 billion, up 142% compared to €1.9 billion in the first half of 2020 and 81% compared to the pre-pandemic first half of 2019. Only in 2016 had a higher value been reached in terms of the amount invested in the first half of the year. The number of deals stood at 253, up 102% compared to H1 2020 (125 investments) and 52% compared to H1 2019.
Major investments in early stage and infrastructure
In detail, the early-stage segment (investments in early-stage companies, seed, start-ups, later stage) grew 314% in amount (€294 million) and 61% in number of deals, 129. Buyouts (acquisitions of majority or 100% stakes) increased by 22% in terms of amount (€1.9bn) and by 204% in terms of number (70). Expansion (minority investments in capital increases aimed at company growth) attracted €299 million (compared to €31 million in H1 2020), spread over 23 transactions (+64%). In infrastructure, investments grew significantly, surpassing buyouts in terms of amount, at €2bn, while the number of deals stood at 25 (compared to 7 in the same period last year).
SMEs remain the engine of the Italian economy
On the investment side, from the point of view of company size, companies with a turnover of less than €50 million once again prevailed, accounting for 72% of the total number (89% in the first half of 2020). This demonstrates the great value of Italian SMEs in driving the economy, a value that is also recognised by investors.
As far as sector distribution is concerned, in terms of number, 72 transactions were carried out in the ICT sector (28% of the total), in the industrial goods and services sector 45 (18%) and in the medical sector 27 (11%).
In terms of geographical distribution, 69% of the 242 deals made in Italy in the first half of the year were made in the North (accounting for 167 investments), 21% in the Centre (51) and the remaining 10% in the South and Islands, which totalled 24 investments. At regional level, in line with previous years, Lombardy ranked first both in terms of the number of transactions (95, or 39% of the total) and the amount invested (€1.2 billion, 27%).
More disinvestments, but still a long way to recovery
A final look at divestments: during the first half of 2021, 43 divestments were made, a number that marks an increase of 43% compared to the first half of 2020, when there were 30, but still lower than the figure for the same period in 2019 (66). The amount disinvested, calculated at historical acquisition cost, stood at €697 million, compared to €395 million in the first half of 2020 (+76%; in the first half of 2019, the figure was €886 million).
The most common channel used in this area was the sale to another private equity player (€876 million, accounting for 55% of the total disinvested). In terms of number of transactions, sales to industrial players were the main exit channel, with 35 exits (43%).