Italy: funds up, investments down

Italian investments were down in the first half of 2003 with €591m invested in 148 deals, a drop of 45% compared to the same period the previous year. The drop is mainly due to Italian firms looking outside their home turf for investments, according to the Italian venture capital association AIFI.

Expansion deals accounted for the lion’s share of investments at 55% (€326m) invested in 69 deals accounting for 47% of the total number of investments. Buyouts took a 13% of the total value with €120m invested in 19 deals. Start-ups in Italy are still struggling to attract investment with 33 completed deals with a total value of €29m, down 33% for the same period the previous year.

In terms of region, the North continues to attract the majority of investment with 95% by value and 90% by volume. Central Italy accounts for 5% by value and 8% by volume and the South takes a mere 0.2% of the value and 1% by volume.

On the fund raising side the mood is more positive. Over €1bn was raised in the first half of 2003, with €840m raised by independent funds focused on Italy. International investors accounted for 70% of this capital with pension funds increasing their share of the total amount, as well as insurance companies and fund-of-funds.

The number of divestments was up 8% on the previous year at 67, but fell 28% by value to €224m. As at 30 June, 2003 the total number of Italian venture-backed companies reached 1,300 with a total acquisition cost of €8bn.

Investments in Italy 1st half of 2003

Year Number Amount

1st half 2000 288 1,320

2000 646 2,968

1st half 2001 295 674

2001 489 2,185

1st half 2002 148 1,080

2002 301 2,626

1st half 2003 148 591

Source: AIFI/PricewaterhouseCoopers

Stage distribution of investments 1st half 2003

Stage Number % Amount (€m) %

Seed and start-up 33 22 29 5

Expansion 69 47 327 55

Replacement 27 18 115 20

Buyout 19 13 120 20

Total 148 100 591 100

Source: AIFI/PricewaterhouseCoopers

Divestments 1st half 2003

Divestment Number % Amount (€m) %

Trade sale 36 54 128 57

IPO/post IPO sale 2 3 4 2

Secondary buyout 6 9 28 12

Write off 4 6 17 8

Other 19 28 47 21

Total 67 100 224 100

Source: AIFI/PricewaterhouseCoopers