Investing in Italian private equity: outlook & opportunities AI FI

Transcription

1 Investing in Italian private equity: outlook & opportunities AI FI

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3 Agenda The Italian macroeconomic scenario The Italian private equity and venture capital market The performance of the Italian private equity and venture capital market 3

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5 The Italian macroeconomic scenario 5

6 World s largest economies Country United States China Japan Germany France Brazil United Kingdom Italy Russian Federation India Canada Spain Australia Mexico Korea, Rep Italy is the 3 rd largest economy in continental Europe, after Germany and France. Notes: ranking by GDP, current USD Source: World Bank 6

7 Some features of the Italian economy Annual percentage change % GDP Private consumption Public consumption Gross fixed capital formation Exports (goods and services) Imports (goods and services) Saving rate of households Current-account balance The Italian economy is supported mainly by domestic consumption and a significant component of demand is funded by current public expenditure. Notes: % GDP , 2013, 2014 forecast Source: European Commission 7

8 GDP among Italian regions Per capita GDP From 30,000 to 35,000 From 25,000 to 30,000 From 20,000 to 25,000 From 15,000 to 20,000 Geographic areas Per capita GDP (Euro x 1,000) Top 7 Italian Regions* 31.5 Germany 30.5 France 29.9 United Kingdom 27.5 Italy 25.7 Italian regions are very different in terms of GDP and economic activity. North and Centre-North regions have higher income and entrepreneurship than other European regions. * Trentino Alto Adige, Valle d Aosta, Lombardia, Emilia Romagna, Lazio, Veneto, Friulia Venezia Giulia Source: European Commission 8

9 World wealth levels Wealth per adult (USD) Under USD 5,000 USD 5,000 to 25,000 USD 25,000 to 100,000 Over USD 100,000 No data Italy is among the richest nations, with an average wealth per adult above USD 200,000. Source: James Davis, Rodrigo Lluberas and Anthony Shorrocks, Credit Swisse Global Wealth Databook

10 Household wealth At the end of 2010, in Italy household net wealth was 8 times the disposable income. Net worth Financial liabilities United Kingdom France Italy Japan Canada Usa The amount of household debt was equal to 70% the disposabile income. Notes: percentages with respect to disposable income, 2010 Source: Bank of Italy, ISTAT, OECD 10

11 Aggregate debt Italian public debt is one of the highest in Europe General government gross debt in Europe (% of GDP) Japan United Kingdom Spain France Italy South Korea United States Germany Australia Canada Households Nonfinancial corporation Financial institutions Government...however, the overall debt is in line with the other European countries. Notes: total debt as % of GDP, Q2 2011, Italy Q Source: Eurostat, McKinsey Global Institute 11

12 Industrial production Share % of the first 20 manufacturers on the global industrial production in 2011 Per capita industrial production (current USD) Rank Country % 1 China USA Japan Germany South Korea Brasil India Italy France Russia UK Spain Mexico Indonesia Canada Taiwan Netherlands Australia Turkey Poland ,500 30,500 25,500 20,500 15,500 10,500 5, Germany Italy Japan USA New EU Russia World Brazil China India Italy is the world s eighth manufacturing country in the world and the second in Europe after Germany. Source: Centro Studi Confindustria on national sources and Global Insight 12

13 Key industrial sectors Role of 4 Fs in trade balance (Euro Bln) Trade balance 4 Fs Energy Other sectors The major sectors of the Italian manufacturing industry, i.e. where our country is most specialized and a substantial foreign trade surplus is recorded, can be listed under the socalled 4 Fs : Food and wines Fashion Furniture and building materials Fabricated metal products and machinery Trade balance of 4 Fs (Euro Bln) Fabricated metal products and machinery Fashion Food and wines Furniture and building materials The traditional Italian sectors cover important high-value-added markets and represent a number of sectors where Italy is a niche leader in technology and quality. Source: Fondazione Edison 13

14 Trade Performance Index Rank Country No. of first position No. of second position No. of third position 1 Germany Italy Russia China Australia France Turkey United States Korea, Rep Textiles Leather products Clothing Basic manufact. Non electric machinery Miscellaneous manufact Notes: ranking out of 189 countries in 14 sectors. Composite Index made up of 5 indices: trade balance; per capita export; world market share; diversification of each macro-sector; diversification of geographical markets Source: elaboration on Unctad/Wto data 14

15 Export propensity 2,649 Number of products in which each country shows a trade surplus 2,177 2,018 1,929 1,683 1,391 1,286 1, China Germany Italy Japan United States Korea France United Kingdom Canada Index of competitive excellence of Italy in the world export market Italy positioning in the export world trade Number of products Value of products First Second Third Fourth Fifth Total 1, Notes: Trade surplus: net export, Index: value in Euro Bln, 2009 Source: Fondazione Edison on data UNComtrade, Fortis - Corradini s Index 15

16 Role of SMEs 3.81 Number of SMEs in Europe for each country (million) Italy Spain France Germany United Kingdom Poland Czech Republic Greece Portugal Netherlands Number of enterprises Employment Value added SMEs 99.9% 80.3% 68.3% The Italian economy, although presently suffering from a decrease in internal consumption, is composed by an healthy number of successful companies in the mid-market sector, historically the bread and butter of the private equity industry. Source: European Commission 16

17 Innovative enterprises Proportion of innovative enterprises, (% of all enterprises) Germany 79% Proportion of innovative enterprises by tipe of innovation, (% of all innovative enterprises) 100% Italy 56% 90% France EU-27 United Kingdom 53% 53% 44% 80% 70% 60% 50% 40% 30% 20% product/process innovation and organisational/marketing innovation organisational/marketing innovation product/process innovation Spain 41% 10% 0% Italy Even if Italy is considered a moderate innovator, more than half of all enterprises reports innovation activity. Source: European Commission, European Innovation Scoreboard

18 Industrial clusters 101 industrial districts: More than 270,000 firms, 30% of the whole manufacturing system 1.4 million employees 96 billion Euro in export (26% of the total export) The most important Italian districts Fashion Mechanics Automation Furnishing Home Food and beverage Other 7 Food and wine 15 Housegoods 16 High tech Mechanical, rubber and plastics 32 Textile and clothing 31 Industrial clusters counterbalance weaknesses of small companies (no economies of scale) and offer add-on opportunities. Source: Osservatorio Nazionale Distretti Italiani 18

19 Key features of the industrial districts Highly labour-intensive production processes and reduced automation Limited fixed capital requirements Modest economies of scale for the entire productive process Innovation linked to learning-by-doing process Growth drivers: Strong social and cultural ties within a limited geographical area, which fosters a rapid dissemination of ideas and easier interaction among individuals, who share a district-based culture The existence of intercompany relationships ensuring the ability to rapidly adapt production process, in terms of volumes (elasticity) and product differentiation (flexibility), to changes in demand Source: The Italian economic situation, Prof. Gros-Pietro 19

20 Family owned businesses USA Australia % on GDP % on total number of companies % of family company 80% 70% Italy Belgium Spain Portugal Finland United Kingdom 60% 50% 40% 30% 20% France Germany 0% 20% 40% 60% 80% 100% 10% 0% 0% 5% 10% 15% 20% 25% Entrepreneurs over 64 In Italy, more than in other developed countries, there is a huge number of family owned companies, often facing generational changes processes. Source: Singer, AUB 20

21 Financial structure Composition of tangible capital invested of mediumsized companies (2009) Tangible net worth Short-term borrowings Medium/long-term borrowings Italian medium-sized enterprises have a lower capitalization than their international peers and a higher level of short-term debt Share of bank borrowings Italy France Germany Spain Italian companies are heavily dependent on bank financing Source: Bank of Italy, Mediobanca 21 Italy Spain Euro Area Germany France United Kingdom

22 Access to bank loans SMEs access to bank loans There is limited financing available from the banking system for companies which want to pursue growth......especially considering small sized companies. Notes: indicator of SME access to bank lending, ranging from zero (worst possible situation) to 1 (best possible situation) Source: ECB, European Commission, Bank of Italy Bank loans by size of enterprise in Italy Enterprises Big-Medium sized enterprises Small sized enterprises

23 Determinants of bank credit demand 0.8 Investments Working capital M&A activity Debt restructuring Source: Bank of Italy 23

24 Conclusions The Italian economy, although presently global suffering from a decrease in internal consumption, is composed by an healthy number of successful companies in the mid-market sector, historically the bread and butter of the private equity industry The current economic environment, coupled with historical characteristics of Italian companies, highlights that the need of private equity intervention is strong and higher than ever Private equity in Italy is still a relative underdeveloped industry, if compared with other developed countries, and the difficult fundraising environment in the last four years has decreased even further the level of competition The time to invest in the Italian PE industry is NOW! 24

25 The Italian private equity and venture capital market 25

26 Evolution of investments Number Companies Amount (Euro Mln) 5,458 4,197 3,034 3,065 3,731 3,583 3,230 2,615 2,461 1,

27 2012 investments allocation by stage Amount (Euro Mln) Number 2, Buy Out Expansion Seed/Start up Replacement Turnaround 27

28 2012 average invested amount by stage Amount (Euro Mln) Amount excluding large and mega deal (Euro Mln)* Total market Buy out Replacement Expansion Turnaround Early stage * Amount invested between 150 and 300 euro million (large deals) or larger than 300 euro million (mega deals) 28

29 Trend of invested amount by deal size Amount of small and medium deal (Euro Mln) Amount of large and mega deal (Euro Mln)* 2,872 1,001 1,348 2,138 1,490 1,297 1,715 1,322 1, ,319 1,145 2,064 2,383 2,059 2,586 1,293 1,326 2,093 1, * Amount invested between 150 and 300 euro million (large deals) or larger than 300 euro million (mega deals) 29

30 2012 number of investments by region % (69.2% in 2011) 206 deals (216 in 2011) 19.4% (19.9% in 2011) 66 deals (62 in 2011) 20.0% (10.9% in 2011) deals (34 in 2011)

31 Evolution of divestments Number Companies Amount (Euro Mln) 3,180 2,633 1,763 1,821 1, ,

32 Investment activity: an European comparison Despite difficult European economic scenario, amount invested by PE and VC in Italy raised at a CAGR of 14.6% in the last 3 years vs a -4.6% CAGR registered by the other main continental European countries FY10-FY12 PE Italian Investments FY10-FY12 PE European Investments (France, Germany, Spain) 4, FY10-FY12 CAGR (invested amount) +14.6% 20,000 FY10-FY12 CAGR (invested amount) -4.6% 4,500 in millions 3,500 3,000 2,500 2,000 1, , , , Number in millions 18,000 16,000 14,000 12,000 10,000 8,000 N of Comp 908 1,442 4,035 4,046 15,018 Spain 3,522m Germany 4,898m 17,441 N of Comp Spain 967 3,233m 1,385 Germany 4,470m N of Comp 830 1,291 3,669 13,681 Spain 2.525m Germany 5,084m 4,000 3,500 3,000 2,500 2,000 Number FY10- FY12 CAGR Spain -15.3% Germ. +1.9% 1, ,000 4,000 2,000 1,685 France 6,598m 1,694 France 9,738m 1,548 France 6,072m 1,500 1, France -4.1% - FY10 FY11 FY FY10 FY11 FY12 - Total amount N of investments N of companies Total amount N of companies 32 Source: EVCA / local PE associations

33 Recent trends of investments by stages Buy outs account for approximately 64% of total 2012 investments and show an increasing trend in the last 3 years (+12%) 3,582m 82 3,230m ,461m Seed/Start up: CAGR +23% Replacement: CAGR -1% Expansion: CAGR +22% Buy-out: CAGR +12% 2,261 2,069 1, Buy out Expansion Replacement Seed/Start up 33

34 Distribution of investments by players The vast majority of 2012 investments (94% in terms of Number and 59% in value) were made by local PE, with a increasing trend in the last 3 years 4,000 3,582m 3,500 3,230m 3,000 2,461m 1, deals 2,500 in millions 2, deals 1, deals 1, deals deals 1, deals 500-1, deals 16 deals Foreign PE not based in Italy Pan European PE based in Italy Italian PE 17 deals 34

35 Divestment activity: an European comparison Italian divestments suffered in 2012, however last 3 years trend of amount divested is still very positive (CAGR +26.7%) compared to the main continental European markets (CAGR -6.6%) FY10-FY12 PE Italian Divestments FY10-FY12 PE European Divestments (France, Germany, Spain) 3,500 FY10-FY12 CAGR (divested amount) +26.7% 160 FY10-FY12 CAGR (divested amount) -6.6% 3, , ,000 12,000 2,099 N of Comp 538 2,373 12,586 Spain 1,551m 2,188 2,500 2,000 FY10- FY12 CAGR Spain -22.7% 2, ,000 in millions 2,000 1,500 1, , Number in millions N of Comp 8,000 6,000 4, ,751 Spain 1,598m Germany 2,186m 809 1,026 Germany 4,747m France 6,288m N of Comp ,759 Spain 956m Germany 2,349m 1,500 1, Number Germ. +3.7% France -6.7% , France 3,967m 907 France 3,454m - FY10 FY11 FY FY10 FY11 FY12 - Total amount N of divestments N of companies Total amount N of companies Source: EVCA / local PE associations 35

36 Main peculiarities of the Italian market Personal relationships are still a key success factor to make deals in Italy. Although we see an increasing trend in auction processes, the percentage of proprietary deals is still higher than in other mature economies Avg write off on total divestments Spain 11,0 89,0 Italy has a lower level of write-offs compared to other Continental European countries Germany France 10,2 8,0 89,8 92,0 Italy 5,5 94,5 0% 20% 40% 60% 80% 100% Write off Other divestments 36 Source: / EVCA / local PE associations

37 Italian GDP vs companies held by PE 12% Economic impact: revenues Our recent study shows that the PE / VC industry had a positive impact on the Italian economy by accelerating companies growth. avg CAGR % 10% 8% 6% 4% 2% 9.8% 2.4% The Revenue growth of PE backed companies was significantly higher than Gross Domestic Product (GDP) growth. 0% Source: ISTAT, and PwC analysis Italian GDP Companies held by PE houses 37

38 Economic impact: employment The 360 PE backed companies analysed, generated c. 35k new jobs between Italian employment rate vs companies held by PE Over the period the Employment growth rate in PE backed companies was higher compared to the Italian employment growth rate. avg CAGR % 7.0% 6.0% 5.0% 5.4% 4.0% 3.0% 2.0% 1.0% 0.0% -0.1% (1.0%) Italian employment rate Employment rate (Companies held by PE ) Source: ISTAT, and PwC analysis 38

39 Economic impact of buy out and venture capital In the period , PE and VC backed companies outperformed other similar sized companies both in terms of revenues and EBITDA growth Buy out Venture Capital Buy out Venture Capital * The benchmark is weighted on the same period of ownership of the companies included in the samples, so it can vary between buy-out and Venture Capital 39

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41 The performance of the Italian private equity and venture capital market 41

42 Disclaimer This document has been prepared by KPMG Corporate Finance, a division of KPMG Advisory S.p.A (hereafter KPMG ), in the exclusive interest of (hereafter the Receiver ). This presentation, and the information contained herein, can be used solely by the Receiver. In receiving the presentation, the Receiver undertakes to ensure that it will be treated as classified and confidential. The Receiver accepts the restrictions indicated here and also undertakes not to use the information for purposes other than those for which the presentation has been drawn up and presented, nor to disclose, reproduce and/or in any event reveal the information to third parties without the prior written consent of KPMG. KPMG has prepared this presentation relying on: publicly available information and data, which are subject to changes; information and data provided, on a confidential basis, by Private Equity and Venture Capital firms operating in the Italian market; information and data provided by the main international associations of Private Equity and Venture Capital firms. KPMG has not independently verified that the information contained in the presentation, or that on which it has relied, is complete, accurate, true or up-to-date, therefore, KPMG assumes no responsibility in this respect. The information contained herein cannot be used for taking any decision whatsoever, without a professional opinion which takes account of the specific and actual situation. This presentation and the expressions found herein should not be construed as a negotiating intention and/or as any kind of investment recommendation or invitation. KPMG accepts no responsibility or liability to any party in connection with the information or views expressed in this presentation KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

43 Index Introduction From Inception Gross Pooled IRR Since Inception Gross Pooled IRR By Horizon Gross Pooled IRR KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

44 Introduction Since 1996, KPMG Corporate Finance, in co-operation with, carries out, on an annual basis, the analysis of the performances of the Italian Private Equity and Venture Capital industry Performances are measured in terms of Gross Pooled IRR, calculated using monthly flows, analysed considering both: realised investments (i.e. divestments) investments still in portfolio Three levels of Gross Pooled IRR From Inception Gross Pooled IRR Performances of divestments realised during the year, regardless of when the initial investment was made Since Inception Gross Pooled IRR Historical performances related to all divestments made since 1986 By Horizon Gross Pooled IRR Performances of the investments made in a 10-year horizon, regardless of whether they have been subsequently divested or kept in portfolio KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

45 From Inception Gross Pooled IRR This type of analysis shows the performances only of divestments realised during the analysed year, regardless of when the initial investment was made No. of realised investments From Inception Total Cash Out (Euro mln) Total Cash In (Euro mln) Yearly Pooled IRR 18.4% 27.1% 30.1% 36.2% 47.1% 34.2% 34.9% 17.8% 24.7% No. of realised investments From Inception Total Cash Out (Euro mln) ,627 1, , Total Cash In (Euro mln) 995 1,956 4,105 2, ,939 1,112 Yearly Pooled IRR 25.1% 28.5% 29.2% 18.9% (16.6%) (11.4%) 12.6% 6.2% Since 1996 more than 1,100 realised investments have been observed; between 1996 and 2012 the divestments monitored increased 2.6 times (from 32 in 1996 to 82 in 2012) Given the wider coverage of the analysis during the years, investment volumes recorded material growth rates: (i) Total Cash Out recorded a CAGR of about 17% and (ii) Total Cash In recorded a CAGR of about 13% The weighted average (in terms of Cash Out) Yearly Pooled IRR stands at around 17% The average investment size is about Euro 9 mln KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

46 From Inception Gross Pooled IRR Euro mln Total Cash Out, Gross Pooled IRR and average investment size Av. inv. size ( mln) 2,000 1,800 1,600 1,400 1,200 1, % 27.1% % 36.2% 47.1% % 34.9% Average IRR % % % 25.1% Total Cash Out A year by year analysis shows three different historical stages: the first stage, between 1996 and 2000, assisted by a favourable economic climate, has been characterised by a strong growth in the number of investments, as well as high levels of IRR the second stage ( ), characterised by a complex macro economic scenario, saw a slowdown of IRR together with an increasing amount of investment volumes the third stage ( ), started with sub-prime crisis, experienced at first a strong downturn of both performances and investment volumes, then followed by a gradual recovery % 966 1, % 1, % KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. IRR % % 1, % 6.2% 840 Average 50.0% 30.0% 10.0% -10.0% -30.0% IRR

47 From Inception Gross Pooled IRR Performance analysis by Upper Quartes 250% 219% 200% 201% 168% 150% 117% 115% IRR 100% 108% 79% 81% 50% 0% 41% 16% 25% 78% 39% 35% 54% 9% 43% 17% 59% 55% 27% 28% 24% 31% 51% 18% 34% 43% 24% 20% 14% 8% -50% -20% -19% Upper Quarter (per performance) Upper Quarter (per investment size) The Upper Quarter per performance, characterized by a widely fluctuating trend, records high levels of IRR especially in the period (more than 150%) The comparison between the Upper Quarter per performance and the Upper Quarter per investment size shows an increasing alignment of the returns over the years, thus indicating the market s greater maturity, as a steadily growing number of transactions records average market performances KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

48 From Inception Gross Pooled IRR Analysis by financing stage Breakdown by financing stage (incidence by number) Incidence by number Early Stage 13% 13% 2% 15% 22% 4% 14% 22% Development 41% 30% 40% 33% 46% 57% 40% 43% MBO/MBI 30% 44% 42% 42% 30% 29% 38% 30% Replacement 15% 13% 16% 10% 3% 10% 8% 5% Breakdown by financing stage (incidence by Cash Out) Incidence by Cash Out Early Stage 4% 10% 0% 3% 3% 0% 1% 5% Development 32% 41% 24% 8% 17% 12% 12% 14% MBO/MBI 48% 30% 61% 85% 80% 66% 50% 80% Replacement 16% 19% 15% 4% 0% 21% 36% 2% On average, more than three-quarters of total transactions, in the period , involved Development and MBO/MBI investments MBO/MBI investments represent, on average, more than 60% of total investment volumes, whereas Early Stage only 3% KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

49 From Inception Gross Pooled IRR Analysis by financing stage Yearly Pooled IRR 100% 89% 80% IRR 60% 40% 20% 0% -20% -40% -2% 14% 37% 15% 45% 14% 17% 21% 21% 15% 36% -3% 21% 21% 10% 35% 14% Neg. -33% Neg. 6% 23% -28% 12% 15% 0%. 1% -22% -11% 8% -60% -80% -100% % Early Stage Development Replacement MBO/MBI In the period comprised between , performance figures were, across the various clusters, generally positive Following the sub-prime crisis, performance figures in , with particular reference on MBO/MBI transactions (i.e. the most representative by investment volumes), dropped to negative values, thus affecting the general performance of the Italian market Although returns are not all positive, a gradual recovery is taking place since KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

50 Since Inception Gross Pooled IRR This type of analysis takes into account the whole panel of investments realised since inception (i.e period), therefore not considering any implicit performance of investments still in portfolio Since Inception analysis More than 1,100 realised investments have been observed between 1986 and 2012 Yearly Pooled IRR stands around 26%, the Upper Quarter per performance reaches more than 80%, whereas the Upper Quarter per investment size is around 20% The average size of the monitored investments is around Euro 9 mln The average cash multiple stands at 1.7x No. of realised investments 1,169 Average investment size (Euro mln) 8.8 Total Cash Out (Euro mln) 10,331 Total Cash In (Euro mln) 17,710 Average cash multiple 1.7x Yearly Pooled IRR 25.8% Upper Quarter (per performance) 82.1% Upper Quarter (per investment size) 19.3% KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

51 Since Inception Gross Pooled IRR Investment volumes, Yearly Pooled IRR, average investment size and cash multiple Av. inv. size ( mln) Cash multiple 2.5x 2.5x 2.4x 2.6x 2.9x 2.3x 2.3x 2.1x 2.1x 2.1x 2.0x 2.2x 2.1x 1.9x 1.8x 1.7x 1.7x 20, % 31.2% 31.4% 31.5% 31.5% 30.6% 30.9% 30.1% 30.6% 30.3% 18, % 29.6% 29.2% 16, % 27.2% 26.3% 25.8% 14, % 30.0% 25.0% Euro mln 12,000 10,000 8, % 15.0% IRR 6, % 4,000 2, % Total Cash Out (Euro mln) Total Cash In (Euro mln) Yearly Pooled IRR Between 1986 and 2012, total investment volumes have reached more than Euro 10 billion of Total Cash Out and about Euro 18 billion of Total Cash In The comparison between the period and highlights (i) a gradual increase of the average investment size (from Euro 2.5 mln to Euro 8.8 mln), (ii) countered by a gradual decrease of the average cash multiple (from 2.5x to 1.7x) Yearly Pooled IRR settles around 26% in the period KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved %

52 Since Inception Gross Pooled IRR Analysis by financing stage Historical IRR since inception distribution by financing stage (1) No. of transactions Incidence by number Yearly Pooled IRR Cash In (Euro mln) Cash Out (Euro mln) Early Stage % 27.1% Development % 15.4% 3,488 2,295 76% 82% 79% MBO/MBI % 42.9% 10,742 5,624 Replacement % 27.1% 2,691 1,733 In line with the From Inception analysis, the breakdown by financing stage shows that in the period : more than three-quarters (around 76%) of total monitored transactions are related to Development (i.e. 43%) and MBO/MBI investments (i.e. 33%) around 80% of total investment volumes (both Cash In and Cash Out) is related to Development and MBO/MBI transactions Focusing on performances, the analysis highlights how MBO/MBI transactions are the top performers within the market (i.e. Yearly Pooled IRR standing at around 43%) (1) Please note that total transaction considered are less than 1,169 (i.e. the total number of transactions monitored in the since inception analysis) due to a lack of specific information/details related to certain transactions: accordingly, the related incidence is calculated only on transactions for which the information/details were available KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

53 Since Inception Gross Pooled IRR Analysis by time gap between first investment and divestment Historical IRR since inception distribution by time gap between first investment and divestment Time gap No. of transactions Yearly Pooled IRR C ash In ( Euro mln) Cash Out ( Euro mln) < % 3,873 2, % % 4,167 2, % 2,950 1, % 2,083 1, % 3,774 2,766 > % IRR About 60% of the transactions have been divested within 4 years from the initial investment There is an inverse correlation between the holding period and Yearly Pooled IRR Analysis by acquired stake Historical IRR since inception distribution by acquired stake Acquired stake No. of transactions Yearly Pooled IRR C ash In ( Euro mln) Cash Out ( Euro mln) < 5% % % - 10% % 1, % 21.1% 10% - 25% % 3,710 2,342 25% - 50% % 2,848 1,782 > 50% % 8,049 3,887 Investments involving majority stakes show higher returns compared to investments targeting minority stakes (37.8% vs 21.1%) KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

54 By Horizon Gross Pooled IRR The By Horizon analysis (also known as Gross Pooled IRR on All Investments ) with particular focus on the long term horizon (i.e. 10 years), examines all the investments made in the reference timeframe (thus during the last decade), regardless of whether they have been (partially or totally) divested or are still in portfolio This analysis is affected by two main issues: the application of an average rolling method to the specific period considered the common practice of a number of Private Equity houses to valuate most of the investments still in portfolio at cost 10 YR By Horizon No. of investments ,041 Total Cash Out (Euro mln) 4,548 5,067 6,150 9,986 10,124 11,228 12,094 13,218 16,001 17,042 Total Cash In (Euro mln) 6,347 7,001 8,474 13,931 15,468 16,521 15,993 17,174 21,381 20,502 Yearly Pooled IRR 28.5% 22.3% 21.1% 22.0% 22.7% 19.6% 13.4% 12.2% 13.3% 7.7% In the last decade ( ) the 10YR By Horizon sample contains more than 1,000 investments, totalling about Euro 17 billion of Cash Out and Euro 20.5 billion of Cash In KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

55 By Horizon Gross Pooled IRR Investment volumes, IRR By Horizon (10 years), average investment size and cash multiple Av. inv. size ( mln) Cash multiple 1.4x 1.4x 1.4x 1.4x 1.5x 1.5x 1.3x 1.3x 1.3x 1.2x 25, % 30.0% Euro mln 20,000 15,000 10, % 21.1% 22.0% 22.7% 19.6% 13.4% 12.2% 13.3% 7.7% 25.0% 20.0% 15.0% 10.0% IRR 5, % Total Cash Out (Euro mln) Total Cash In (Euro mln) Yearly Pooled IRR The comparison between the 10YR horizon and the 10YR horizon highlights a significant increase of the investment volumes: increase of 275% of Total Cash Out and increase of 223% of Total Cash In The average investment size increased from Euro 7.3 mln in the 10YR horizon to Euro 16.4 mln in the 10YR horizon ; whereas the average cash multiple fluctuates in the range 1.2x-1.5x In line with the macroeconomic scenario, performances started significantly lowering from the YR period KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 0.0%

56 By Horizon Gross Pooled IRR Investments still in portfolio (10 YR Horizon) Investments still in portfolio breakdown (incidence by number) Incidence by number Book value deals 70.1% 62.2% 54.4% 56.3% 54.1% 50.9% 47.6% 53.6% 58.3% Re-valued deals 2.3% 21.8% 30.0% 27.3% 27.5% 26.6% 28.7% 26.3% 25.7% Depreciated deals 27.6% 16.0% 15.6% 16.3% 18.4% 22.4% 23.7% 20.0% 16.0% Investments still in portfolio breakdown (incidence by Cash Out) Incidence by Cash Out Book value deals 77.8% 65.3% 70.0% 53.3% 57.0% 40.8% 35.4% 41.3% 46.8% Re-valued deals 0.4% 27.2% 20.7% 30.0% 15.8% 34.7% 37.8% 42.1% 29.7% Depreciated deals 21.8% 7.6% 9.3% 16.8% 27.2% 24.5% 26.8% 16.5% 23.5% The incidence by number of book valued deals decreases from about 70% (in the period) to about 58% (in the period ), thus still representing more than half of the sample; whereas in terms of incidence by Cash Out (more relevant for performance measurement), we observe a stronger decrease from about 78% (in the period) to about 47% (in the period ) On average (in the analysed period) re-valued deals and depreciated deals represent (both by number and by Cash Out) respectively one-quarter and one-fifth of the sample KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

57 By Horizon Gross Pooled IRR Net Pooled IRR: a comparison with the European Benchmark 18% 17.0% IRR 16% 14% 12% 10% 8% 6% 4% 11.9% 13.5% 10.4% 12.5% 11.4% 13.2% 10.3% 14.1% 11.5% 11.8% 9.3% 8.8% 8.0% 7.3% 5.1% 8.0% 5.6% 4.6% 2% 0% Italy Net Pooled IRR (10 YR) Europe Net Pooled IRR (10 YR) An empirical analysis estimates that Italian Net Pooled IRR would seems to fall in a range comprised within 50%-65% of the related gross figure The comparison with the European market highlights that the domestic market is substantially over-performing during the period analysed (except in 2009) Notes: 2012 performance figures related to the European market are not yet available Source: EVCA In 2011 the panel considers the following 28 countries: Austria, Belgium, Channel Islands, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovenia, Spain, Sweden, Switzerland, Turkey and United Kingdom KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

58 Contacts Francesco Giordano Partner PwC Transaction Services francesco.giordano@it.pwc.com Innocenzo Cipolletta Chairman presidenza@aifi.it Maximilian P. Fiani Partner KPMG Corporate Finance mfiani@kpmg.it 58

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