Bollazzi 2023_Expansion_Hat PDF

17 novembre 2020 Agenda 1. Introduction 2. Private Equity 3. Expansion Capital 4. Deal Process 5. Value Creation 6. Case History 2 Section 1 Introduction HAT SGR INVESTMENT STRAT...

17 novembre 2020 Agenda 1. Introduction 2. Private Equity 3. Expansion Capital 4. Deal Process 5. Value Creation 6. Case History 2 Section 1 Introduction HAT SGR INVESTMENT STRATEGY FOCUS ASSET UNDER MANAGEMENT € 320+ € 85 million million Management of 4 INNOVATION TECHNOLOGY Advisory mandate for an alternative investment international fund in Italy funds MANAGED PRODUCTS Infrastructure Private Equity Venture Capital Infrastructure & Energy SME Technology & Innovation TBD Fund SI HAT Sicaf Fund ICT Fund T&I TBD € 130 mln € 42 mln € 50 mln € 100 mln 5 Section 2 Private Equity How does Private Equity works? In Private Equity, managers of an Asset Management Company (General Partners, GPs) employ investors’ capitals (Limited Partners, LPs) to invest in non-listed companies. These investments are aimed at increasing companies’ value, generating a return to LPs and, in case of overperformance, for GPs, too 7  Private Equity Process Meeting the Entrepreneur Internal Valuation Practice Signing Deal Due Value Exit Scouting Valuation & Structuring Diligence Creation Strategies Closing Internal Scouting NDA Organic Growth External Advisors LOI/NBO External Growth SPA – SHA Competitive Bid Private Transaction Financing 8 Section 3 Expansion Capital 9 Expansion Capital Expansion capital is a type of private equity investment in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business Size Time 10 Main Features 1. Growing companies 5. Medium 2. Capital to long term increase EXPANSION CAPITAL 3. Financial and 4. Business Plan Managerial support 11 Advantages for Target Companies PE investors provide the target firm with funding, allowing Financial Resources the implementation of the business plan and a more ambitious growing strategy PE funds have a wide network both in the financial world Network and in the entrepreneurial one, offering the possibility to create key relationships for the company’s success Most of Private Equity managers have relevant experience Managerial expertise in advisory, investment bank or Private Equity itself, providing target companies with high managerial expertise HR Due Diligence These are basic contributions brought by a Private Equity investor. Not to be confused with the investment strategies that are usually implemented in expansion capital operations 12 Investors’ Point of View The PE fund that carries out an expansion capital investment should keep in mind four fundamental conditions 1 2 3 4 Identification of a Cultural fit with the Drafting of a Favorable target firm with a organization and trust Business Plan to be Corporate Governance growth potential in the in the entrepreneur achieved in the that protects middle term and management selected time frame the fund’s investment Expansion capital riskiness and consequent investors’ expected returns is lower than other operations in the private capital sector (such as venture capital or turnaround) 13 Section 4 Deal Process  Deal Steps Meeting the Entrepreneur Internal Valuation Practice Signing Deal Due Value Exit Scouting Valuation & Structuring Diligence Creation Strategies Closing Internal Scouting NDA Organic Growth External Advisors LOI/NBO External Growth SPA – SHA Competitive Bid Private Transaction Financing 15 HAT Investment Strategy Ticket Geography HAT is looking for target firms characterized by one or more of the following criteria: 5-15m Italy Dimension. Equity ticket between €5m and €15m to be invested in SME to support their consolidation process and reach the adequate dimension needed to increase competitiveness Geography. Mainly Italian firms EBITDA margin PFN/EBITDA Market Leadership. Particular attention is given to firms that have a strong competitive advantage in their reference market (brand, technology, patents, know-how etc.) >12% < 2x Innovation level. HAT pursues the objective to accelerate companies’ innovation through digitalization and processes interconnection (Industry 4.0) Entrepreneur/management value. Reliability of the entrepreneur Positioning and top line management is fundamental to the value creation Profitability and cash generation. Firms with sustainable high Niche leader/ Market profitability (EBITDA>12%, NPF/EBITDA