Luigi Terranova, the CEO of Real Investmenti, provided an insightful overview of the Italian private equity market in a recent fireside chat with host Giovanni Amodeo. Terranova’s career began in the mid-80s at Citibank, followed by a switch to Standard Chartered in Milan, where he was involved in the nascent leveraged buyout market in Italy. His journey continued into the realms of corporate strategy, business model understanding, and organization through a boutique management consulting firm, where he worked closely with top Italian entrepreneurs.

During his 15-year tenure at the consulting firm, Terranova also assisted the Rialto family in investing in small and mid-cap companies, leading to the establishment of Real Investmenti in 2006. The firm has since grown into a multi-asset strategy entity, managing private equity, private debt funds, and a new venture capital fund launched a few months prior to the chat.

Real Investmenti’s focus remains on Italian small and mid-cap companies, aiming to assist them with financial expertise and innovation. With a third private equity fund currently managing €150 million and launching a new €250 million buy and build fund, the firm has a total of €500 million under management. The new strategy involves 6-7 platform companies in fragmented sectors, intending to make no more than four acquisitions per platform to ensure synergies and value creation.

Terranova emphasized the importance of intimate relationships with entrepreneurs, avoiding auctions in favor of direct negotiations. In 2023, Real Investmenti evaluated around 100 deals, culminating in two investments. The firm’s approach is characterized by a deep understanding of the businesses they invest in, with 50% of their investor base being private entrepreneurs.

Looking ahead, Terranova expressed interest in potentially launching an impact strategy and sector-specific funds, including infrastructure, acknowledging the need for technical professionals like data scientists to adapt to technological advancements like generative AI. With a consistent performance that outperforms public markets, private equity remains a key interest, while infrastructure presents a growing opportunity due to Italy’s investment needs.

Key timestamps:

00:08: Introduction to ION Influencers Fireside Chat
21:27: Company Acquisitions
22:25: Recruitment and Professional Figures
23:39: Recruitment Criteria
24:18: Technical Hiring Consideration
25:23: Deal Workflow and Investment Process
27:30: Deal Origination and Selection
28:36: Preference for Direct Engagement
29:09: Private Debt and Private Equity
30:58: Interest in Asset Classes
32:21: Investment Performance and Impact