The first half of 2024 starts well for financial operations in Italian retail. Confimprese says that so far this year, 14 financial operations have been announced and largely closed, 8 of them in the first half of the year, completed by private equity funds for an amount of 208 million Euros against 6 deals for a value of 69 million Euros in the same period 2023. 

Two other operations were closed after 30 June 2024: another four operations were announced by strategic investors such as Richemont, Miroglio, L'Occitane and Fressnapf. The main deals include Tod’s, Vhernier, Elisabetta Franchi, Trussardi in fashion; La Piadineria, Fra Diavolo, Temakinho in catering, Acqua & Sapone, Veralab, Kiko and Dr. Vranjes in cosmetics and beauty, Animalia and Arcaplanet in petfood and petcare. 

According to Confimprese, despite some positive economic indicators at a global level, such as inflation close to the target level in all major economies, interest rates in a phase of decline and a similar situation in Italy with inflation, September reached the lowest level recorded since the beginning of the year, +0.7%, in retail the dynamics at the numerical level of private equity and venture capital operations are down compared to the previous 4 years. However, the amount of investments is higher, indicating that forward transactions are larger so that the weight of retail in the total market for private equity operations is 5% as in 2019. In a brand consolidation process, there is room for M&A operations. 

These are, among others, the main evidences emerged from the annual conference "Retail & finance. Challenges and opportunities for retail investment" promoted by Confimprese. Although the 2024 data show a modest dynamism, it is not true, however, forgotten that 2022 remains the record year for private equity and venture capital operations in retail with 859 million Euros of investments compared to 31 deals: in the following two years, the international geopolitical situation, inflation which reached record levels in Italy, the increase in interest rates and a high volatility of markets have led to a strong stagnation of consumption, which in the progressive year January-August 2024 compared to January-SeptemberAugust 2023 recorded a decline of -0.4%. 

"The decline in private equity and venture capital transactions in retail is linked to the international geopolitical crisis of the last 2 years that has created a climate of greater caution and selectivity on the part of financial investors -explains Mario Resca, president of Confimprese-. Modern retail companies, which combine multi-channel strategies and interpret consumer data to offer products and services that meet their needs, are important enterprises and potentially interesting for financial investors, They are also exposed to changes in consumption and consumer purchasing power, and some may feel that they are more vulnerable when purchasing power is contracting or particularly strong during upswings. Growing retail businesses need to finance their development with a significant amount of working capital and long-term financial resources to support demanding expansion projects. Therefore, to support important development plans the opening of the capital to financial investors becomes indispensable".

The PwC Retail & Finance research registers further aggregations in the segments personal care, cosmetics, pet food, pet care and a selective restart in the catering sector with preference for fast dining models without sitting. One of the key issues for our country’s system is improving its ability to attract foreign investment. In 2023, foreign capital flows into our system decreased by 40%: our country was able to attract only 18 billion Euros, half the size of Spain. According to the report, Italy will increasingly need resources, especially after the end of the NRPR funds. 
It is equally important to promote the business aggregation of small and medium-sized enterprises in order to create economies of scale capable of facing global competition and promoting innovation. Today in Italy the retail sector is still very fragmented: the rate of presence of chains in the Italian market is about a third of the European average.

"Private equity funds interested in retail -says Emanuela Pettenò, consumer & markets deals leader PwC Italia-, will look above all to resilient assets and business models with strong potential for organic and inorganic growth in the national market, exportability, reduced capex for new openings, limited exposure to the business cycle. Industrial operators will look with interest at situations in turnaround or financial tension and take the opportunity of partial divestments to focus on the core business".