ggi italian business summit rome, italy 11th – 13th october 2013 m&a opportunities within the...
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GGI Italian Business Summit
Rome, Italy
11th – 13th October 2013
M&A opportunities within the distressed
economy: Italy 2013
Simona Cucchi, Sergio Finulli
© 2013 – Comma 10© 2013 – Comma 10
for confidential & GGI use only
1. The Eurozone crisis
2. Italian economic outlook
3. Comma10 experience
4. Opportunities within the crisis
Index
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
© 2013 – Comma 10
Economic downturn hits the whole Eurozone area, with focus on the Southern regions; signs of weakness also from the core countries.
Financial confidence recovery Real economy remains sick.
Real GDP growth rate - Source: Eurostat
1. Euro zone crisis – Not over yet
Global Financial and
Economic Crisis
Severe Recession
Partial Recovery
© 2013 – Comma 10
Italy debt remains quite stable over the years
+67%
+57%
+10%
+25%
+55%
+24%
+10%
+25%
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
1. The Euro zone crisis – The Public Debt
Crisis dramatic increase in the public debt of most advanced economies.
The Government debts are escalating in most EU countries, not only in countries with a history of debt problems but also in countries where the debt level was relatively low before the crisis.
Source: Global Finance
%
Period of macro level financial challenges Italian deep-rooted strenghts are being overlooked:
» Italy is the 8th largest economy and the 8th largest exporter in the world
» Italy is the 4th largest economy and the 2nd industrial manufacturing country among the EU economies
© 2013 – Comma 10
Source: IMF, 2012
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
2. Italian economic outlook – Where we are now
The largest economies and industrial manufacturing countries
Source: World Bank, 2012
» Italian market: a EUR 1.6 Trillion economy
» Export-led economy: EUR 478 Billion of exportations, negligible energy and raw materials, Germany and France as largest export markets
» Composition of the internal market:
• Services (73 %) Excellent infrastructure system
• Industry (25%)
Leading activity: processing and production of manufactured products
Major industries: mechanical industries (cars, motorcycles, machine tools, household appliances ), defense (helicopters, defense systems, light weapons, armored vehicles), chemicals (oil, rubber, pharmaceuticals), electronics
“made in Italy” products (textile products, production of clothing and footwear, agri-foodstuffs and design) give a significant contribution to the national wealth, known and appreciated throughout the world
• Agriculture (2%)
» Company size: a few global multinational corporations and a large number of small and medium-sized enterprises (SMEs)
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
2. Italian economic outlook – Economy in a nutshell
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
2. Italian economic outlook – Focus on SMEs
© 2013 – Comma 10
High propensity to entrepreneurship:
SMEs
• represent 99.8 % of enterprises in the non-financial business economy
• generate approx 60 % of value added within the non-financial business economy
key driverfor economic growth,
innovation, employment and social
integration
FEATURES:
FlexibilitySpecializationInnovation
levels of excellence in many areas
filling the gaps left by the large companies
Competitiveness based on the agility of the SME sector
© 2013 – Comma 10
Opportunities and risks of doing business in Italy:
1) High thecnology products unable to reach the internal market
2) Financial stress
3) Management and generational shift issues
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
3. Comma 10 experience – Where opportunities rise
© 2013 – Comma 10
3. Comma 10 experience - Example
The Yacht industry case
JV between an affirmed Chinese boat producer, “ the investor”, and an Italian Yacht company, in charge of designing and developing the production.
The business idea: Construction: to take advantage of the high technological content and design of
the Italian production of luxury yachts, which is distinguished worldwide for quality and refinement
Sale: to take advantage of the attractiveness of the Italian marine industry to get a front row seat for the allocation of the boats to the international market, more receptive than the national one.
After the first experience with 3 yachts, the investor is planning to begin the construction of a cruise ship. Actually, Italy is among the very few countries, all Europeans, who have advanced experience and excellent quality standards for the construction and the assembling of this type of craft.
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
1 Product specialization unable to reach the internal market
Renewables Energy Producers case
The incentive mechanisms set up by the Goverment in the recent years resulted in a explosive
growth of renewable plants in Italy.
In a contest of Power Market overcapacity and final demand reduction, the incentives have
been revised and most of the operators are facing seriuos financial problems.
Foreign investors are looking at this sector for industrial and financial investments at revised
and sustainable cash flows.
Our client has been collecting money among investors of his country and then he bought 6 SPV companies in Italy, whose energy production will entirely be absorbed by the Italian Energy Web Management Body, at a fixed price, for 19 years.
3. Comma 10 experience - Example
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
2 Financial stress
© 2013 – Comma 10
SMEs: often too small to enclose managerial skills required to survive in the global market.
The entrepreneur usually requires professional support in structuring and making decisions to growth and develop his business.
The Npex case
Opportunity to raise capital in a international trading platform created with the aim to trade less liquid securities.
Italian SMEs ready to partecipate?
3. Comma 10 experience - Example
3 Management and generational change issue
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
© 2013 – Comma 10
4. Opportunities within the crisis
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
» High level and high added value general productions, branded productions and niche productions carried out by SMEs
Operations of limited size
» Italian economic downturn» SMEs willing to grow beyond the national borders» Difficulties in accessing the credit
Injection of capital
» Market conditions lead companies to drop prices Market values much lower than a few years
ago.
Good moment to buy?!
Investing in Italy can be attractive but it also implies some hurdles…
© 2013 – Comma 10
4. Opportunities within the crisis
Foreign Investors
Target compani
es
© 2013 – Comma 10
GGI Italian Business SummitRome, Italy 11th – 13th October 2013
© 2013 – Comma 10
Thank you for your attention