The Italian Private Capital Market Trends and Perspectives 9 June 2017 Update on Key Statistics EY Enrico Silva EY Private Equity Leader Mediterranean area
In 2016 fund-raising is close to historical pre-crisis maximum. USD appreciation against Euro makes Europe more attractive for USD based funds Fund-raising in USD and EUR (bln $- ) 362.4 293.5 677.2 686.1 542.0 491.2 461.6 430.0 419.3 375.3 326.5 326.9 308.0 272.1 235.4 232.8 555.6 418.6 577.1 437.5 603.5 546.0 653.5 594.0 209.2 196.3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 4m17 Aggregate Capital Raised (USD) Aggregate Capital Raised ( ) Notes: Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt Page June 2 2017
Buyout funds maintain the leadership in fund raising even if real estate, venture capital and infrastructure funds are increasing their relevance Fund-raising by type of fund (bln $) 542.0 677.2 686.1 555.6 577.1 603.5 653.5 362.4 79.2 (21.9%) 141.0 (38.9%) 104.6 (19.3%) 225.1 (41.5%) 138.7 (20.5%) 249.6 (36.9%) 142.6 (20.8%) 226.4 (33.0%) 326.5 54.4 (16.7%) 115.0 (35.2%) 308.0 55.1 (17.9%) 78.7 (25.6%) 375.3 77.0 (20.5%) 86.5 (23.1%) 419.3 79.4 (18.9%) 100.5 (24.0%) 107.1 (19.3%) 197.2 (35.5%) 113.1 (19.6%) 181.6 (31.5%) 126.5 (21.0%) 159.7 (26.5%) 120.2 (18.4%) 212.9 (32.6%) 209.2 24.3 (11.6%) 84.7 (40.5%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 4m17 Others Fund of Funds Growth Distressed & Turnaround Infrastructure Venture & Early Stage Real Estate Buyout Notes: (1) Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt (2) Others include: Natural Resources, Secondaries, Mezzanine, Balanced, Expansion/Late Stage, Co-Investment, Hybrid, Direct Secondaries, PIPE Page June 3 2017
In the recent years several new international funds have included Italy in their investment strategy Fund-raising of funds with investment focus in Italy (bln $, CAGR%) 23.1 20.9 +32.1% 21.4 17.6 13.6 11.2 12.5 7.9 7.9 6.3 7.0 8.4 0.4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 4m17 Italy focus Notes: Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt Page June 4 2017
Following high level of fund-raising, global M&A activity peaked in but retreated in 2016, with investors struggling in finding opportunities Global M&A Trend Global Private Equity buyout Trend (bln $, CAGR%) (bln $, CAGR%) 4,000 +9.1% 3,925.9 450 +5.1% 422.8 3,500 3,000 2,500 2,000 1,500 1,000 500 2,311.6 465.7 565.6 523.3 757.1 2,236.8 447.1 560.2 657.4 572.1 3,212.1 566.8 964.1 858.3 822.9 760.1 1,035.6 927.3 1,202.9 3,276.7 622.9 754.1 886.3 1,013.3 678.5 400 350 300 250 200 150 100 50 278.4 313.1 362.7 339.3 74.0 0 2012 2013 2014 2016 4m17 0 2012 2013 2014 2016 4m17 1Q 2Q 3Q 4Q Source: Monthly M&A Insider MergerMarket Notes: Deal status: Announced and Completes includes add-on Page June 5 2017
The difficulty in allocating funds raised and the fierce competition forced GPs to broaden their geographical investment criteria, including Italy Global Private Equity M&A Trend (bln $) Italy Private Equity Trend (bln $) 450 400 350 300 250 200 150 278.4 313.1 362.7 422.8 339.3 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 3.5 2.4 6.2 7.2 100 50 74.0 2.0 1.5 1.0 0.5 0.9 1.4 0 2012 2013 2014 2016 4m17 0.0 2012 2013 2014 2016 4m17 Notes: Deal status: Announced and Completes Notes: Deal status: Announced and Completes includes add-on Page June 6 2017
As a consequence of strong fund raising and investments difficulties, the dry powder of Funds increased Global dry powder (bln $) (bln $) 1.323 1.472 1.411 Europe dry powder 1.173 1.179 1.047 1.041 983 965 982 924 785 549 143 194 242 263 267 238 234 222 286 303 303 347 338 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 4m17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 4m17 Page June 7 2017
Italy 2016 PE investment value is aligned to last year and slightly below pre-crisis level Italy investment value (mln ) 4,059.1 3,000.2 3,116.7 2,936.9 2,783.8 2,312.4 1,354.1 1,978.7 1,228.1 1,692.0 1,582.6 37.0% 24.1% 36.1% 60.9% 30.3% 705.3 29.8% 34.7% 30.0% 31.1% 52.8% 40.0% 23.8% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 Leisure Health care and social services Retail and wholesale trade Other professional and social services Utilities Pharmaceutical and biopharmaceutical industry Media and communication Consumer goods Transportation Cleantech Food & Beverage Industrial products Construction ICT Financial services Source: PEM Page June 8 2017
DIP remains the most attractive sector for private equity investments followed by consumer goods and food & beverage Italy investment number (Unit) 93.0 123.0 116.0 128.0 85.0 82.0 90.0 109.0 100.0 23.0 (24.7%) 29.0 (31.2%) 32.0 (26.0%) 33.0 (26.8%) 30.0 (25.9%) 30.0 (25.9%) 29.0 (22.7%) 49.0 (38.3%) 53.0 7.0 14.0 (13.2%) (26.4%) 71.0 15.0 (21.1%) 14.0 (19.7%) 15.0 (17.6%) 21.0 (24.7%) 15.0 (18.3%) 24.0 (29.3%) 68.0 13.0 (19.1%) 22.0 (32.4%) 22.0 (24.4%) 39.0 (43.3%) 19.0 (17.4%) 29.0 (26.6%) 14.0 (14.0%) 27.0 (27.0%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 Leisure Health care and social services Retail and wholesale trade Other professional and social services Utilities Pharmaceutical and biopharmaceutical industry Media and communication Consumer goods Transportation Cleantech Food & Beverage Industrial products Construction ICT Financial services Source: PEM Page June 9 2017
# of transactions EV/ EBITDA Most of the sectors shows substantial increase in EV/Ebitda multiple value Multiple trend in Italy by sectors (EV/EBITDA) Source: PEM Page June 102017
Data analytics for Private Equity PE Monitor EY services Social Media EY project outputs External data Company Financial Data EY Credential Stock mkt & commodity data Macroeconomics Page June 112017
Data analytics for Private Equity how are we doing this? What are we doing? Internal data sources We have launched a pilot project with a leading Italian PE house and one of its portfolio companies We are connecting our data analytics technology to all of the company s systems housing key data (fin, HR, ops, etc.) in addition to public data (market, social media, etc.) in order to enable a single, real-time data analytics financial and operational dashboard for the entire business and its markets Financial HR Operational Single data analytics platform (Spotfire) Value for client Better day-by-day management of portfolio companies and more informed decision-making Quick delivery of Vendor Due Diligence reports prior to exit Social Media Sector M&A External data sources Page June 122017