In recent years, the Private Equity sector in Europe and Italy has demonstrated a remarkable ability to generate extra returns. The sector has in fact recorded an over-performance (“alpha”) compared to the index FTSE IT Small Cap of 10%, as shown by a risk/return analysis on 400 European Private Equity funds in the period Q4 2014 – Q3 2021. During 2023, the Italian private equity and venture capital market recorded investments for a value of 8,162 million euros, down -12% compared to the boom of the previous year. However, 8 out of 10 Private Equity operators in Italy believe that the sector has outperformed the stock market over the last decade mainly thanks to M&A operations (64%) and organic growth (33%) based on internalization, the development of new products and the identification of new market segments.
The situation in Europe
In Europe, Private Equity funds had 338 billion euros of “dry powder“, uninvested capital, which represents a significant source of new investment opportunities. Globally, according to some forecasts, it is possible for the sector to reach the ambitious threshold of 26 trillion dollars of AUM by 2026 (source Preqin).
The Italian scenario: green and digital transition key factors for the growth of invested companies
According to a survey conducted in Italy by Deloitte of 32 companies in the Private Equity sector, 75% of operators believe that Private Equity will continue to generate “alpha” throughout the entire investment cycle in the future. In Italy, according to interviewees, the main risks that could hinder the generation of over-performance in the sector are the escalation of geopolitical tensions at a global level (44%), protectionism and supply chain disruptions (31%), the cost of money and the trend of interest rates (17%), demographic trends (6%). Over the last ten years, the sectors that have attracted the most interest from Italian Private Equity operators have been Manufacturing (36%), Telco (22%), Fashion, Food and Furniture (22%), services including Education, health and financial services (14%), Energy (6%).
A Decalogue to Guide the Creation of Sustainable Value
Deloitte report identifies ten key strategies to actively manage the companies in the invested portfolio, focusing on an approach that goes beyond the simple creation of financial value. First of all, a strategy focused on real medium-long term productivity growth, compared to traditional strategies oriented towards short-term EBITDA improvement; then a more pronounced use of new digital technologies, including the integration of AI in an ethical and effective way, making the best use of human capabilities in synergy with advanced technologies.
