Minority investments are an increasing feature of the Italian PE market. One key driver of minority investments is demand from many entrepreneurs, founders and small and medium-sized businesses for funding to refinance existing debt, pursue acquisition opportunities or to expand their operations. Many are discovering that funding is unavailable from traditional sources such as banks on terms that they are willing to accept. Separately, sponsors are also teaming up with co-investors to share some of the risk associated with an investment, resulting in the PE fund holding a minority stake.
Italy has a wide array of small and medium-sized businesses, many owned by families or entrepreneurs. With additional investment many of these businesses could grow locally and internationally, but some owners are reluctant to hand over full control to a third party investor. For such businesses, a minority investment can be an attractive alternative. For example, in December 2014, US PE firm Catterton acquired a minority stake in Intercos, an Italian cosmetics company. The founder and CEO, Dario Ferrari, retained a majority stake and remained in his management position.