GGI Italian Business Summit - PowerPoint Presentation

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GGI Italian Business Summit Rome, Italy 11th – 13th October 2013 M&A opportunities within the distressed economy: Italy 2013Simona Cucchi, Sergio Finulli

© 2013 – Comma 10

© 2013 – Comma 10

for confidential & GGI use only

The Eurozone crisisItalian economic outlookComma10 experienceOpportunities 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

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 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 worldItaly is the 4th largest economy and the 2nd industrial manufacturing country among the EU economies

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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 economyExport-led economy: EUR 478 Billion of exportations, negligible energy and raw materials, Germany and France as largest export marketsComposition of the internal market:Services (73 %) Excellent infrastructure system Industry (25%) Leading activity: processing and production of manufactured productsMajor 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 worldAgriculture (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

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Opportunities and risks of doing business in Italy: High thecnology products unable to reach the internal marketFinancial stress3) Management and generational shift issues

GGI Italian Business SummitRome, Italy 11th – 13th October 2013

3. Comma 10 experience – Where opportunities rise

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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 refinementSale: 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 explosivegrowth of renewable plants in Italy. In a contest of Power Market overcapacity and final demand reduction, the incentives havebeen revised and most of the operators are facing seriuos financial problems. Foreign investors are looking at this sector for industrial and financial investments at revisedand 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 Summit

Rome,

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 Summit

Rome,

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 downturnSMEs willing to grow beyond the national bordersDifficulties 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…

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4. Opportunities within the crisis

Foreign

Investors

Target companies

© 2013 – Comma 10

GGI

Italian

Business Summit

Rome,

Italy 11th – 13th October 2013

© 2013 – Comma 10

Thank

you for your attention

sergio.finulli@comma10.it

mariagiulia.signori@comma10.it

simona.cucchi@comma10.it