Private equity firms are increasingly targeting Italy’s family-owned industrial companies as investors seek businesses with physical assets, specialist manufacturing capabilities and lower exposure to disruption from artificial intelligence according to a report by Bloomberg.
The trend is particularly visible along the A4 motorway linking Turin, Milan and Venice, a 250-mile industrial corridor packed with mid-sized manufacturers that have built global niches in sectors including aerospace, defence, precision engineering and specialist machinery.
The region has become a growing focus for international investors as private equity firms look to rebalance portfolios that have become heavily exposed to software and services businesses vulnerable to technological disruption.
KKR, Ares Management and Evercore are among the firms to have expanded their presence in Milan over the past year, joining a growing group of international dealmakers targeting Italy’s private companies.
The search is increasingly centred on so-called HALO — heavy-asset, low-obsolescence — businesses whose physical infrastructure, manufacturing capabilities and specialist expertise may be more difficult for AI to replicate.
Many private equity investors are underweight industrial businesses and overweight services and software, creating pressure to rebalance portfolios.
Italy’s appeal has grown despite long-standing concerns around political instability, public debt, bureaucracy and slow legal processes. The country has benefited from growing investor interest following Brexit and several years of political stability under Prime Minister Giorgia Meloni.
“It’s not so much that the economy has changed, but rather that investor interest in Italy has grown,” said Marco Bellino, partner and head of PAI Partners’ Flagship Fund in Italy. He described the country as attractive for investors seeking to increase their exposure to HALO assets.
PAI recently partnered with a local private equity firm to acquire Mecaer Aviation Group, a manufacturer of helicopter systems operating between Turin and Milan.
Another example is Officina Stellare, a specialist aerospace company founded in 2009 by astronomy enthusiast Giovanni Dal Lago. The company designs and manufactures optical systems for satellites, defence and scientific research.
Following a contract for a joint NASA and German space agency mission, Officina Stellare listed publicly in 2019 before being combined earlier this year with Investindustrial’s Global Aerospace Technologies Group in a reverse takeover. The enlarged company is headquartered near Venice and has a market value of approximately €800m.
For investors, Italy’s manufacturing sector offers a combination of specialist expertise, export strength and fragmented ownership that can support consolidation strategies.
Manufacturing companies with at least 50 employees generate more value per worker than their German and French counterparts according to Eurostat measures, despite Italy’s broader productivity challenges.
Italy was the world’s fifth-largest exporter in 2025, up from eighth a decade earlier, according to Milan-based think tank Fondazione Edison.
Yet private equity penetration remains relatively low. Ownership of unlisted Italian companies by private equity and venture capital firms is the lowest among European countries, according to S&P Global Market Intelligence. The comparable penetration rate is almost twice as high in Germany and nearly four times higher in France.
That gap is beginning to narrow as founders and second-generation family owners approach succession decisions.
Goldman Sachs has expanded its Milan office five-fold over the past seven years to pursue lending and investment banking opportunities. Marco Paesotto, the bank’s co-head of investment banking in Italy, said the country had never seen so many private equity firms.
PitchBook recorded 679 private equity transactions in Italy in 2025, a 16% increase from the previous year, while deal activity slowed in the UK, France and Germany.
The changing business environment is also encouraging family-owned companies to seek outside capital. Greater geopolitical uncertainty, more complex trade relationships and technology-driven disruption have made scale and diversification increasingly valuable.
SEMA Systems, which develops automated fire safety systems for trains, is one example of a business that has expanded after being rescued in 2021 by investor Chetan Sahai.
Following significant investment in research and development, Sahai expects revenue to quadruple from last year’s level by 2027 and is considering further acquisitions both within and beyond Italy’s rail sector.
Italy’s fragmented industrial landscape also creates opportunities for buy-and-build strategies, according to Eliana Catalano, managing partner at law firm BonelliErede.
Family owners have become more sophisticated, while consolidation in the country’s banking industry has reduced some of the financing options historically available to mid-sized businesses dealing with succession and ownership issues.
The investment opportunity is not without risks. Italy continues to face high energy costs, complex regulation and lengthy legal processes, while local rivalries and resistance to consolidation can complicate cross-border transactions.
In aerospace and defence, companies have historically favoured independence over consolidation, according to Alessandro Franzoni, chief executive of Officina Stellare. But as the market becomes increasingly European, that approach is changing.
The industrial base along northern Italy’s A4 corridor has its roots in the region’s postwar manufacturing expansion and access to relatively cheap hydroelectric power from the Alps. Thousands of smaller companies have since built profitable positions in global niche markets.
Pharmaceuticals and precision machinery have been among the main drivers of Italy’s export growth in recent years, while more traditional industries such as textiles and furniture have weakened.
Maurizio Tamagnini, chief executive of FSI, said Italy’s strength lies in its combination of highly skilled manufacturing and engineering businesses.
The next opportunity, he argued, is to combine those traditional industrial capabilities with new technologies.
