Equita Capital SGR, the alternative asset management company of Equita Group, and Cordusio SIM, the wealth management boutique of the UniCredit Group, have launched Equita Smart Capital – ELTIF, a private equity and “alternative” PIR fund which will invest in Italian small and medium enterprises (SMEs).
The strong expertise of Equita as asset manager and the ability of Cordusio SIM – who has supported Equita Capital SGR during the structuring phase of the product and who will act as first distributor of the Fund – to offer to its clients innovative solutions beneficial for the Italian economy will both play a central role for the success of the initiative. Moreover, as an “alternative” PIR fund, “Equita Smart Capital – ELTIF” will offer tax-exemptions to its investors. These include exemptions from capital gains and financial incomes taxes (such as no taxes on dividends and interests), no inheritance taxes and a tax-credit of up to 20 per cent of the amount invested in 2021 to cover for any capital losses.
Matteo Ghilotti, Chief Executive Officer at Equita Capital SGR, says: “The goal of Equita Smart Capital – ELTIF is to meet investors’ demands for extra-returns whilst providing SMEs with professional knowledge and access to financial resources to support their growth strategies”. “The initiative is fully aligned with Equita’s mission to offer investment solutions to institutional investors and partners’ retail clients.
“We are very pleased that an international group like UniCredit and a prestigious institution like Cordusio SIM have supported this project since the beginning”.
Manuela D’Onofrio, Head of Group Investment Strategy at UniCredit and Head of Investments & Solutions at Cordusio SIM, says: “With this type of investment we want to offer our customers access to the growth that Italian SMEs are expected to achieve over the next few years. For this purpose, we have selected a partner that we consider the most capable and reliable in searching value in the Italian entrepreneurial universe. This investment solution is fully in line with our portfolio and corporate strategy. We are strongly committed to the real economy and to supporting the Italian companies.”
Equita Smart Capital – ELTIF is an Italian closed-end alternative investment fund (AIF) and focuses on a long term and flexible investment strategy with the aim of improving investors’ returns. The fund meets the requirements of “alternative” PIR products as it mainly invests in Italian private SMEs, as well as in listing and listed companies with a market capitalisation below Euro 500 million. Between 60 per cent to 70 per cent of the fund’s assets will be invested in small and medium private companies (private equity), 20 per cent to 35 per cent in listed companies (public equity) and the remaining 5-10 per cent in listed bonds (public debt). Such mix will allow the fund managers to seize the best opportunities of both private and public markets.
With specific reference to private equity, the fund will mainly invest in qualified minority shareholdings and, selectively, in majority shareholdings, primarily through capital increase transactions alongside the target’s management team and entrepreneurs. The fund will also consider potential co-investments alongside primary financial institutions to invest in larger deals.
The fund is targeting to raise EUR140 million and will have a term of 8 years starting from the date of First Closing and an investment period of four years. The targeted gross return in terms of internal rate of return (IRR) is set between 12 per cent and 14 per cent per year, calculated over the entire life of the fund and representing a multiple on invested capital (MOIC) of about 1.8x.
The fund will benefit from Equita Capital SGR’s deep understanding of Italian small and mid caps, a proprietary network of business connections, and from an independent management team with long-standing expertise in private capital investments. The fund will also benefit from synergies with the wider Equita Group’s business model: the latter will ensure Equita Smart Capital – ELTIF access to a wide and constant deal flow of investment opportunities – a critical success factor for investment funds that focus on illiquid strategies – and significant benefits during the execution of exit strategies from investments thanks to the standing role of Equita as leading independent investment bank in Italy that everyday supports entrepreneurs in the execution of extraordinary financial transactions, including access to capital markets.
Cordusio SIM is a strategic partner for its customers to whom it is able to offer diversified solutions capable of satisfying the most complex and sophisticated needs. A goal that Cordusio SIM pursues in the awareness of the responsibility that owning and managing a large asset entails, also in relation to the positive impacts that strategic management is able to generate on the economy of our country. This is why Cordusio SIM provides highly specialised advisory and manages tailor-made investment solutions, capable of seizing the opportunities arising from the market, while, at the same time, affecting it.
Stefano Lustig, Co-Head of Alternative Asset Management, and Rossano Rufini, Head of Private Equity – co-sponsors of the project – says: “The Fund has its focus on the many small and medium-sized Italian “pocket multinationals”, which are the engine of our Country’s exporting power. Equita Smart Capital – ELTIF will help channelling capital into the real economy and power the post-pandemic recovery, supporting companies’ growth and competitiveness whilst creating value for all stakeholders”.
The fund is available for subscriptions to both professional investors and individual investors with an adequate financial profile, with minimum investment set to EUR10,000. Investors can subscribe the fund also through the distribution platform Allfunds Bank. Equita Capital SGR and its management team will invest along-side investors to guarantee full alignment of interests.
The ELTIF structure will guarantee to investors high standards in terms of protection, portfolio composition and diversification of asset allocation, in addition to a favourable tax regime (subject to specific requirements and conditions provided for by “alternative” PIR regulation, including specific holding period requirements).