• 22 May 2017
  • Private equity sets sights on the Italian retail industry

  • Private equity is setting its sights on the Italian retail industry. With 28 transactions worth €1.8 billion, 2016 was the strongest year since 2010. What has grown above all is the total value of signed deals: within 12 months they tripled compared to the 456 of 2015, and are getting close to the €1.668 billion of 2014. The number of operations is in line with the average of recent years.

    These are the key numbers for the “retail and consumer product” segment which will be presented Wednesday in Milan during the meeting “Retail and private equity – opportunities and synergies for the growth of networks” organized by Confimprese, EY, Aifi and Borsa Italiana. At the roundtable, stakeholders will discuss the role of private equity, private debt and mixed funds supporting the growth of Italian chains.

    “2016 was a positive year for the retail and consumer product sector, characterized by a growing trend in multiples and stability in the number of transactions,” said Stefano Vittucci from EY. “Beyond the omnichannel model, the growth in value is supported by the importance of the physical network, the attractiveness of sales points, the capacity for brands to launch new openings and the appreciation of the introduction of new stores and the strategy of network growth.”

    “Private equity is following the retail world with increasing attention, confirming the attractiveness and strength of the Italian chains,” said Mario Resca, president of retail business association Confimprese. He said that foreign funds are the most active: “The appeal of Made in Italy and the push toward internationalization of chains attract foreign investors which in this way complete their own portfolio,” added Vitucci.

    “If on one hand the arrival of foreign investors can be seen as an impoverishment of the national economic fabric, on the other hand it brings in fresh capital supporting internationalization,” the Confimprese president added.

    The entry of a fund in a modern commercial company, aside from making new economic resources available to accelerate development, introduces new managerial competences, and strategies of growth, according to Andrea Cipolloni, chief executive of shoewear company Pittarosso. Since the entry of 21 Investimenti, led by Alessandro Benetton, the company has seen its revenues and sales points multiply.

    “At the end of the year, according to the 2017 budget, we will have 220 shops and a turnover of around €400 million,” said Cipolloni. “That compares to 50 stores and €100 million in 2011, a network developed over 40 years.”

    Regarding the duration of investments, the Unieuro case is an exception.

    “The Rhone Capital fund entered in Sgm Distribuzione in 2005,” (which owned the Marco Polo-Expert brand), explained Giancarlo Nicosanti Monterastelli, chief executive of Unieuro. “The company was then able to increase turnover sixfold, now at €1.66 billion, and multiply sales points to 180 from the original 21, also thanks to the acquisition in 2013 of the ex Unieuro from Dixons.”

    After its launch on the stock exchange, the fund remained a reference shareholder according to a long-term vision that culminated last Wednesday with Unieuro’s acquisition of 21 sales points of Andreoli, a company present in central Italy with the Euronics brand.