Global private credit firms, led by industry giant Ares Management, are turning their focus on Italy, as more small businesses – the backbone of country’s economy – open up to external investors, providing increased buyout opportunities, according to a report by Reuters.
According to Deloitte, Italy has seen 140 direct lending deals over the past 45 quarters, representing just 4.3% of continental Europe’s total transactions. However, increasing competition across Europe, where traditional banks are reclaiming parts of the syndicated loan market and squeezing returns, is pushing firms to seek new growth areas.
The report quotes Tyrone Cooney, a partner at Ares Management Credit Group responsible for France and southern Europe: “Italy is the new frontier for direct lenders due to its growing relevance for private equity firms active in the mid-market.”
Ares, which manages $428bn in assets globally, has recently completed three deals in Italy with investments ranging between €50m and €150m. Despite increasing competition, Italy remains less competitive compared than the UK, France and the Benelux region.
Direct lenders often focus on middle-market firms, which are too small to issue public debt and require financing beyond the scope of a single bank. Italy’s industrial north hosts hundreds of family-owned companies competing globally, many of which are increasingly opening up to private equity as their owners age. In 2022, the industry association AIFI recorded 224 private equity investments in Italian family-owned firms, up from 151 four years earlier.
