In a recent fireside chat, Raffaele de Courten, Co-Founding Partner at Alto Partners, shared his insights on the Italian investment landscape, the evolution of private equity, and the key differentiators for success in the market.

Italian Investment Landscape: Opportunities and Challenges

De Courten highlighted the significant growth in sophistication of the Italian private equity market over the past 20 years, with the introduction of hybrid instruments, club deals, and thematic verticals. Despite this, he emphasized the importance of balancing proprietary and competitive sourcing, leveraging network and experience to identify opportunities.

The Italian market presents unique challenges, including a dual country effect, with Northern Italy being more industrialized and entrepreneurial than the south. De Courten estimated that there are around 5,000 companies in Italy with an EBITDA between €10-30 million, but many of these family-owned businesses are not familiar with private equity.

ESG and Sustainability: A Broad Picture

De Courten expressed scepticism about the current focus on ESG and sustainability, suggesting that it may lead to a tick-box exercise rather than a genuine commitment to responsible investing. He emphasized the importance of considering the broader picture and adopting a holistic approach to ESG, rather than simply chasing certifications.

Independence and Flexibility: Key Differentiators

De Courten highlighted the benefits of independence, allowing for quicker decision-making and a more entrepreneurial approach. He also emphasized the importance of flexibility in structuring deals and incentivizing management teams.

Talent Attraction and Fundraising: Challenges and Opportunities

De Courten acknowledged the challenges of attracting talent to smaller funds like Alto Partners, but emphasized the potential for growth and exposure to deal-making. He also discussed the increasing importance of fundraising, citing the need to dedicate significant time and resources to LP relationships.

Consolidation and Industry Evolution

De Courten expressed skepticism about the likelihood of consolidation in the Italian private equity industry, citing the strong egos and independence of Italian GPS. He also discussed the need for specialization and focus, rather than diversification, to achieve success in the market.

Investment Strategy and Sector Focus

De Courten expressed optimism about the entertainment, healthcare, and technology sectors, citing demographic trends and the need for value creation through add-ons. He also emphasized the importance of platform deals in creating critical mass around funds.

Asset Allocation and Long-Term View

When asked how he would allocate $1,000 for long-term investment, De Courten jokingly suggested keeping a significant proportion in cash, citing the need for diversification and caution in the current market.

Overall, De Courten’s insights provide a nuanced understanding of the Italian investment landscape, highlighting the importance of flexibility, independence, and a long-term view in achieving success in the market.

Key timesetamps:

00:09: Introduction to ION Influencers’ Fireside Chats
00:44: Background and History of Alto Partners
02:29: Changes in the Investment Landscape in Italy
04:21: Discussion on Green and Thematic Funds
06:56: Challenges and Education on ESG and Sustainability
08:45: Sourcing and Negotiation Skills
10:34: Addressable Market in Italy
12:02: Awareness of Private Equity in Italy
12:50: Progress in Private Equity Deals in Italy
13:36: Concerns about Low Number of Exits
14:43: Advantages of Independence in Asset Management
16:28: Considerations on Private Credit Arm
17:19: Talent Attraction and Market Dynamics
19:15: Barriers to Entry and Market Evolution
20:43: Expectations for Consolidation in Italy
21:48: Challenges in Fundraising and Investor Relations
23:58: Fundraising Challenges
25:24: Co-Investment Dynamics
26:07: Threats and Incentives
26:44: Market Outlook
27:57: Post-COVID Trends
28:40: Long-Term Investments