The Pipeline Explorer is a new column discussing likely sponsor and VC exit transactions based on Dealogic’s Likely to Issue (LTI) predictive algorithm. Based on a number of key industry, holding behaviour, and dealflow criteria, Dealogic’s platform assigns an LTI score to each exit opportunity, with a higher score corresponding to a higher likelihood for an imminent transaction.  

• Private equity-backed exits YTD record EUR 8.7bn
• Consumer and industrials assets dominate sponsor-backed exit pipeline
• Calligaris, La Piadineria and Bozzetto Group among sale candidates

Despite the uncertainties on the back of the outcome of the general elections, with a victory of the far-right coalition , and a gloomy international macroeconomic scenario, the Italian M&A market is expected to keep moving at a good pace, sustained by private equity (PE) activity, dealmakers polled by this news service said.  

A private equity-led deal, the EUR 42.7bn public offer launched for Atlantia [BIT:ATL] by controlling shareholder Edizione and its partner Blackstone [NYSE:BX], was the largest announced transaction of 1H22, which alone accounts for some 51.8% of the YTD value, according to Dealogic data. Buyouts targeting Italian firms have reached their highest YTD value and second-highest volume on record at EUR 54.4bn across 62 buyouts, as per the data.

On the exit front, a total of 24 sponsor-backed exits worth EUR 8.7bn have been recorded so far this year, a 37.2% uptick by value versus YTD 21 (EUR 6.3bn, 30 deals) despite six fewer exits over the equivalent time period.

Following the usual summer lull, activity has already started to pick up as PEs gear up their Italian portfolio companies for an exit, with consumer and industrials assets boosting the pipeline, according to Dealogic’s Likely to Issue (LTI).  

Among consumer assets, Alpha-backed furniture manufacturer Calligaris, which ranks sixth among sponsor-backed exit candidates with a score of 68.73 as of time of publication, has attracted interest from a mix of strategic and financial investors. Meanwhile, Permira is expected to assess exit options for tortilla restaurant chain La Piadineria in the latter part of this year. 

On the industrials front, sponsor Chequers Capital is preparing to launch this autumn the sale of portfolio company Giovanni Bozzetto, a textile chemicals firm. Meanwhile, Clessidra has already launched the auction for lighting company L&S, ranked 24th with a score of 59.96, with initial bids expected in late September or early October.  

Other deals in the pipeline include the upcoming sale of IT services provider Project Informatica by HIG; and that of top-ranked pharmaceutical manufacturer Neopharmed Gentili by Ardian, which is in the final stages with three bidders left in the process.   

Despite the healthy deal pipeline, the current macroeconomic landscape and valuation issues have been holding court among dealmakers for some time now. After the buoyant levels reached last year and in 1H22, valuations are experiencing a general decrease, which has started affecting the course of some deals.  

For instance, BC Partners paused the sale process of Forno d’Asolo before the summer break. Ardian also halted the sale of Dedalus, ranked 67th with score of 51.77, following a disappointing round of offers, although the process might be reprised in the autumn.  

The valuation decline is due to a combination of two factors, namely a general challenge in business performance on the back of increasing costs and supply chain constraints, and a reduction in valuation multiples, according to Claudia Lotti, Senior Managing Director, and Raffaele Fiorella, Senior Advisor at FTI Consulting. A readjustment on deal multiples is generally expected, also given the increased cost of capital, they said.  

A challenging access to financing could also be a key obstacle for smooth deal execution in the coming months, while deferred or frozen IPO processes might represent additional opportunities for investments by financial sponsors, club deals, and alternative investors, according to Pier Paolo Ferrando, partner at PwC Italy.   

Indeed, financial sponsors are still awash with record sums of dry powder raised in previous months, and several funds are on the lookout for investment opportunities. Mid-market funds are also still eager to make bolt-on acquisitions to further grow their portfolio companies. Alcedo, for instance, acquired fresh pasta producer Reggiana Gourmet for an undisclosed amount in May. Bertoncello ranks 59th on the LTI ranking with a score of 53.29. The sponsor was also in August in the final stages of bolting-on tractor manufacturer MaterMacc to its portfolio company Agrimaster. Agrimaster ranks 46th with a score of 55.22. 

Despite a troubled year for Italian IPOs, with many listings postponed or scrapped altogether, a number of VC-backed players have an IPO exit in sight. Among them is camping site operator Club del Sole, backed by NB Aurora, which ranks fifth among VC-backed exit candidates with a score of 5.29 as of time of publication. The company is considering an IPO in 12 to 18 months, having received positive investor interest. 

Takeaway food company Poke House is also contemplating an IPO in 24 to 36 months once it has grown the business via acquisitions in key geographies. 

Digital insurer Yolo recently raised EUR 9.5m through a listing, EUR 10m including the greenshoe, and is now targeting M&A as it focuses on international expansion.  

Technology assets are among those ranked higher among VC-backed companies tipped for an exit by Dealogic’s LTI. Top ranked Scalapay tapped the market this year, raising USD 27m (EUR 28m) from Poste Italiane in a Series B extension. Everli, an online grocery delivery service, raised EUR 22m in a capital raise in March, which is part of a EUR 100m Series C round announced last year, while online property marketplace Casavo raised  EUR 400m via an equity and debt deal. And just this week, payment app operator Satispay announced a EUR 320m Series D round at a valuation exceeding EUR 1bn. 

by Valentina Caiazzo and Micaela Osella in Milan, with analytics by Jonathan Klonowski

Proprietary Intelligence – The following reports published in the last three months originated from or have fed into Dealogic's LTI platform: 

Companies for sale

Cadicagroup (26/09/2022) - LTI sponsor exit rank 5 with a score of 69.20

Sponsor HIG Capital has appointed Mediobanca and Lazard to handle the sale of textile company Cadicagroup, a source close to and a source familiar with the situation said. The process, which should begin in less than a month’s time, will target financial and strategic buyers. Cadicagroup will be marketed off its EUR 27m 2022 EBITDA forecast.

Project Informatica (23/09/2022) - LTI sponsor exit rank 2 with a score of 74.97

IT services provider Project Informatica, owned by HIG Capital, is positioning for a sale, five sources familiar with the matter said. The exact timing of the process has not been determined, but HIG has started considering an exit as its investment in Project Informatica has reached its maturity. Rothschild is the frontrunner for the mandate.

Spirale (15/09/2022) – LTI sponsor exit rank 212 with a score of 33.84

Safety boots maker Spirale is set to hit the Italian auction pipeline in a renewed sale process, three sources familiar with a situation said. Owners B.Group and Ersel have appointed Fineurop Soditic to run a process due to launch in the coming weeks and expected to target financial and strategic investors. The potential deal will entail the 73% stake that has been on the hands of B.Group and Ersel since March 2012.

NTC (08/07/2022) – LTI sponsor exit rank 92 with a score of 49.48

NTC, a pharmaceuticals company, is expected to be put up for sale this year by Wise, according to three sources familiar with the situation. Wise, which acquired NTC in 2015, has not yet granted any mandates. It is expected to select advisors later this year, with the process beginning around the autumn or the end of 2022. 

IPOs

ACBC (05/08/2022) - LTI VC exit rank 23 with a score of 1.68

Anything Can Be Changed (ACBC), an eco-friendly footwear company, expects to start selecting IPO advisors in June next year, with a view to get listed between 2023 and 2024, CEO and co-founder Gio Giacobbe said. It will target the Euronext Growth Milan segment for its listing, aiming to raise around EUR 10m.

Club del Sole (11/07/2022) – LTI VC exit rank 5 with a score of 5.29

Club del Sole, a camping site operator backed by sponsor NB Aurora, is considering an IPO in 12-to-18 months after receiving positive investor interest, a source close to and two sources familiar with the situation said. The company would look at Italian tour operators to find potential benchmarks for a listing, such as Grandi Viaggi [BIT:IGV] and Destination Italia [BIT:DIT], as suitable peers active in the same space.

Companies looking to buy

Yolo (08/08/2022) – LTI VC exit rank 9 with a score of 3.38

Yolo, a digital insurer, is prioritising the expansion of its digital and physical policy distribution platform and eyeing international growth after completing a listing in Milan, CEO and co-founder Gianluca de Cobelli said. The company will look at M&A opportunistically but most of its efforts this year will be directed at expanding its digital policy distribution partners, including deals with telecoms and utility companies.

Agrimaster (01/08/2022) - LTI sponsor exit rank 46 with a score of 55.22

Agrimaster, a manufacturer of agricultural machinery owned by Alcedo, is in the final negotiation stages to buy tractor manufacturer MaterMacc, four sources familiar with the situation said. Once the add-on is completed, Alcedo expects to progress its exit plans from Agrimaster.

Poke House (27/07/2022) – LTI VC exit rank 7 with a score of 4.77

Poke House, a takeaway food company specialising in Hawaii-style Poke cuisine, is eager to make acquisitions before the end of the year, possibly in the Nordics or the US, a source close to and a source familiar with the situation said. Management is considering four dossiers with the aim to finalise at least one acquisition by December.