ITALY Trends and Developments Contributed by: Alessandro Corno, Marco Nicolini and Luca Magrini, Alma LED
Alma LED Via Principe Amedeo, 5 20121 Milano Italy Tel: +39 02 6556721 Email: info@alma-led.com Web: www.alma-led.com
Introduction The years 2025 and 2026 represent a strategic period for Italian private equity growth and evolution. Follow - ing a tumultuous phase defined by external shocks – global health crises, supply chain disruptions, energy volatility, wars and geopolitical strife – the Italian finan - cial ecosystem stands on firmer ground. Confidence in macro-economic fundamentals and regulatory frame is increasing, yet new uncertainties and opportunities require a more sophisticated approach from investors and advisers. Italy’s private equity market is no longer a niche mar - ket for speculative capital. Over the past years, it has developed into a strategic investment arena within the broader European markets, especially in the lower and mid-market space. Italian assets attract cross-border and sophisticated sponsors willing to capitalise on consolidation, professionalisation and digital transfor - mation trends. In addition, the fact that these assets are often traded at multiples lower than those applied to comparable assets in other EU markets and in the US, makes the Italian targets even more attractive. This chapter of the guide focuses on certain key legal, economic and operational matters, tries to identify impediments, and attempts to draw conclusions on evolving market practices for the coming years. Economic Backdrop Underpinning the Projected Italian PE Industry Growth The Italian macro-economic scenario for 2025–26 presents a mix of stability and modest optimism. Projected GDP growth is 0.7% for 2025 and 0.9% for 2026, which reportedly reflects a noteworthy inter - nal rebalancing where consumers’ consumption and
fixed investment are more evenly distributed, and also thanks to the gradual and progressive lessening of inflation. Consumer confidence and investment Consumer spending is expected to grow by 1.2% in 2025, supported by a moderate increase in wages. Equity markets have also shown a positive course, attracting retail capital and increasing the value of retail investors’ savings. Invested capital stock has returned to a positive course, primarily thanks to the ongoing deployment of NextGenerationEU and National Recovery and Resilience Plan (PNRR) funds. These public aid programmes are intended to finance large-scale investments in digital, green and infra - structural projects, attracting private investment and increasing project pipelines for PE and infrastructure investors. Cost of capital and inflation Estimates and projections on inflation rate suggest a decrease from 1.8% in 2025 to 1.5% in 2026. In 2025, the European Central Bank fixed the reference rate at 2.5%, which favoured an increase in capital allocation to private market instruments, including leveraged buyouts, structured credit and real assets. This macro-economic scenario makes debt structur - ing more predictable. Public debt and employment rate Italy’s annual deficit is expected to decline from 3.4% of GDP in 2024 to 2.9% by 2026. However, the stock of public debt is expected to remain high. In addi - tion, the unemployment rate is expected to remain close to its lowest level, at approximately 5.9%. This
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