ITALY Trends and Developments Contributed by: Alessandro Corno, Marco Nicolini and Luca Magrini, Alma LED
labour market condition is expected to favour a sta - ble increase in internal demand, which in turn should favour the long-term success of portfolio companies. Global Political and Commercial Scenario, and Newly implemented US tariffs on select European exports are reportedly expected to cut the continent’s anticipated aggregate growth by an estimated 0.5% for the year. For Italian private equity, this prompted reorientation towards businesses with strong, endog - enous demand over those primarily reliant on global supply chains. Sectoral pivot and resilience Geopolitical disorder has urged GPs to require portfo - lios to focus on sectors with limited international vola - tility and, where possible, local pricing power. This is visible in the increased focus on healthcare, domestic energy infrastructure and “Made in Italy” manufactur - ing – sectors that are demonstrating resilience – which have become central to portfolio construction strate - gies. New risks Sectoral Risk Global winds Aside traditional policy-making risk, Italian private equity faces emerging regulatory paths, including cybersecurity, data sovereignty and supply chain localisation. The intense and rapid regulatory change, particularly at the EU level, requires continuous dili - Notwithstanding the global political and economic uncertainty (driven by wars and conflicts, commer - cial tariffs), which would normally play in favour of a prudent approach, deal making in the Italian private equity sector has proven remarkably resilient. Significant deal count, increasing structuring creativity and sophistication The second-highest historical investment value year for PE occurred in 2024 due to several large buyouts and infrastructure investments, although the Italian PE market remains the ideal space for lower and mid- market investments. In the first half of 2025, some 249 gence and flexible investment strategies. Private Equity Deal Activity: Growth and Sophistication
deals have closed and expectations for the second half of 2025 remain optimistic. Creative and innovative deal structure Private equity now represents over 44% of Italy’s total transaction value in M&A, with a significant increase in transaction complexity, involving creative second - ary buyouts, cross-fund syndicates and hybrid capital solutions. Internationalisation Pan-European funds’ and US sponsors’ focus on the Italian PE market is driving a certain elevation of mar - ket standards, increasing competitive pressure and bringing deal sophistication. Financing of PE Deals Through Private Credit: An Increasingly Favoured Option for Sponsors Private credit funds are becoming the preferred alter - native for financing deals. Transformative change in financing solutions In 2024, private credit financed deals for nearly EUR70 billion across Europe, and Italy was the largest market in Southern Europe. Appeal of the private credit solution In the first half of 2025, nearly 30% of all Italian PE financings utilised private credit structures, often replacing conventional syndicated loans. This is essentially due to the speed, flexibility and bespoke solutions that private credit offers, including more stretched leverage ratios and more creative capital structures – often playing as a competitive factor in auction processes. Flexibility for sponsors Private credit financing also allows sophisticated sponsors to ambitiously pursue more aggressive, transformative business plans with less reliance on – and concern about – sometimes slow and generally less flexible bank solutions. Diversification of the Investor Base A profound change is underway in the composition of Italian private equity’s investor base, which is expand - ing from traditional LPs (such as local insurance com - panies, pension funds and selected international LPs)
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