As the first quarter of 2016 draws to a close, it is clear that the eurozone’s economic recovery remains challenging and slower than expected. Following cuts to the growth and inflation outlook, the European Central Bank announced that it had cut interest rates and will be expanding its quantitative easing program. Although Italy moved out of recessionary territory in early 2015, real GDP remains below 2008 levels and its core growth problems look set to continue across the rest of 2016.
As shown in the chart above, Italy-focused private equity fundraising, either solely or as part of a wider geographic focus, has fluctuated over time, failing to return to the peak number of funds closed and capital secured in 2007 (when 21 funds secured €9.8bn). So far in 2016, four funds have reached a final close, accumulating approximately €3bn, two of which are focused solely on investments in Italy – 21 Investimenti III and Wisequity IV collected a combined €558mn. Four solely Italy-focused funds closed in both 2014 and 2015, securing €842mn and €390mn respectively.
In 2015, six buyout funds raised €5.2bn, accounting for 93% of the total institutional capital secured by Italy-focused funds that year. One growth and one venture capital fund secured the remainder of capital, raising €48mn and €85mn respectively. So far this year, three buyout funds have secured €2.6bn, with one balanced fund raising €400mn. However, the pipeline for private equity funds focused on Italy is stronger, with Preqin’s Private Equity Online tracking 20 Italy-focused private equity funds targeting €4.9bn in institutional capital commitments. The majority of targeted capital is focused on buyout and venture capital investments; eight buyout funds are seeking approximately €3.6bn in capital and a further nine venture capital funds are targeting approximately €1bn. Two-thirds of Italy-focused funds in market target investments solely in Italy, and of these, only one is managed by a private equity or venture capital firm headquartered outside Italy (in the US).
Despite the challenges Italy has faced in recent years, Preqin data shows a promising start to 2016 for Italy-focused private equity fundraising. The aggregate capital raised in 2016 so far already accounts for over half the amount secured in 2013 – the peak post-Global Financial Crisis year for Italy-focused fundraising.