Dealtalk - Italy's family firms forced into private equity arms

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The potential rewards were dramatically highlighted on Monday by news that Investindustrial, the Italian private equity firm which owns luxury motorbike brand Ducati, is looking to sell it for up to 1 billion pounds ($1.6 billion), three times its initial investment in 2005.

"The Ducati deal demonstrates that there are great opportunities for private equity deals in Italy that have often been overlooked," said Fabio Lorenzo Sattin, chairman and founding partner of Milan-based private equity firm Private Equity Partners SgR SpA.

"The time to invest in private equity is now."

BLOODY NOSES

There is unlikely to be a scramble from the rest of the world however: the global buyout giants that flocked to Italy in the boom years have pulled back after receiving bloody noses on deals like luxury yacht maker Ferretti.

Ferretti was saddled with 1.2 billion euros of debt in 2007 after its leveraged buyout by Candover , then defaulted on payments as it suffered in the economic downturn. Candover not only lost its investment but went out of business itself.

"There has been a huge retrenchment out of Italy and that's as a function of not being able to do successful deals," a banker who advises private equity firms on deals said.

After peaking in 2008 at $13.5 billion (8.5 billion pounds), total private equity investment in Italy fell to reach a provisional $1.5 billion in 2011, according to Thomson Reuters data, reflecting a shift to smaller deals.

Arle, the firm that has risen from the ashes of Candover, now focuses on Northern Europe. Others including 3i Group and BC Partners have trimmed staff in Italy over time, while Vestar shut its office in Milan last year.