Surfing the Tsunami | How Private Equity responds to the economic impact of Covid-19 - 29 APRIL 2020
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Surfing the Tsunami | How Private Equity responds to the economic impact of Covid-19 29 APRIL 2020
Agenda 01 PE deals announced in Jan-Apr 2020 02 Private Equity and to the economic impact of Covid-19
01 SUMMARY BY SECTOR
Private Equity | Deals by industry - Italy
161 deals have been executed during 2019 in line with 2018; the first four months of 2020 showed a decrease of c.15%
and c. 25% in deals volume compared to 2019 and 2018 respectively
NUMBER OF PRIVATE EQUITY DEALS IN ITALY BY INDUSTRY (JAN 2018 – APR 2020)
# deals
130
124
120 115 9
110 6 7
5 5
100 7 6
90 11 15
80 8
8
7
70
Other
60 Energy & utilities
35
50 Automotive
43 46
40 4 37 ICT
1 3 32
5 2
4 Healthcare
30 3 1 4
2 2 1 Services
3 1
20 5 3
18 39 Industrial products
25 11 11
10 Consumer goods
9 9 9
0
Jan-April Rest of Year Jan-April Rest of Year Jan-April
2018: 2019: 2020:
158 161 32
Source: goetzpartners research and analysis 301 SUMMARY BY SECTOR
Private Equity | Deals by industry - Italy (2/2)
The first four months of 2020 showed a contraction in deal volume mainly concentrated in March
NUMBER OF PRIVATE EQUITY DEALS IN ITALY BY INDUSTRY (JAN-APRIL 2018-2020)
# deals
25
23
21 3
20
20 2
1
2
1
17 2
1
2
1 1
2
15
3 1
4
1
1
Other
1 9 Energy & utilities
10 Automotive
9 7 8 8
7
ICT
7 1
6 2 Healthcare
1
2
1 1
5
1 1 1
2 Services
1 1 7 1 Industrial products
5 3 2 1
4 4 2
3 1 1 Consumer goods
1 1 1 1
0
Jan-Feb March April Jan-Feb March April Jan-Feb March April
2018: 2019: 2020:
43 37 32
Source: goetzpartners research and analysis 4Agenda 01 PE deals announced in Jan-Apr 2020 02 Private Equity and to the economic impact of Covid-19
Key highlights
◼ Almost 80% of respondents experienced a negative impact of the Covid-19 on their portfolio companies whereas only 4% are the ones which had an
economic benefit from it
◼ Between 40% and 56% of the portfolio companies has been negatively impacted by Covid-19
◼ The industries most affected by the Covid-19 are the automotive, fashion & luxury and the non-food retail
◼ The industries with the highest resiliency are lifesciences, packaging and food & beverages and TMT/ICT
◼ Key priorities are short term challenges as cash management, additional liquidity as well as assure safe working conditions and minimize supply chain
disruption. Notably, longer term strategic initiatives such as digital transformation, business model re-shaping and strategic road map definition are
also perceived as relevant
◼ 20% of PE funds have de facto frozen the investment activities and origination but more than 50% will actively continue to deploy dry powder
◼ Uncertainty and perceived risks represent the key issue for new investments right now
◼ In the next months TMT/ICT, lifesciences, business services, food & beverages, packaging and industrial goods and machinery will attract new
investments
◼ Q2 will see a sharp slowdown of the exit processes and 50% of the planned exit decisions will be postponed in 2021
◼ PE funds’ managers expect a decrease of multiples and companies valuations in the coming months
6Surfing the Tsunami survey | Impact on portfolio companies
Almost 80% of respondents experienced a negative impact of the Covid-19 on their portfolio companies whereas only 4%
are the ones which had an economic benefit from it
Q1: OVERALL, WHICH HAS BEEN THE ECONOMIC IMPACT OF THE COVID-19 ON YOUR PORTFOLIO COMPANIES?
%
80
c.71%
70
60
50
40
30
20 c.17%
10 c.8%
c.4%
0%
0
Strongly Negative Negative Neutral Positive Strongly Positive
Source: goetzpartners interviews and analysis 7Surfing the Tsunami survey | Share of portfolio companies affected
Between 40% and 56% of the portfolio companies has been negatively impacted by Covid-19
Q2: HOW MANY OF YOUR PORTFOLIO COMPANIES HAVE BEEN IMPACTED NEGATIVELY OR STRONGLY NEGATIVE BY
THE PANDEMIC (% OUT OF YOUR TOTAL PORTFOLIO COMPANIES)?
%
60
56%
50
40%
40
30
20 19%
10
0
First quartile (25% of respondents) Median (50% of respondents) Third quartile (75% of respondents)
Source: goetzpartners interviews and analysis 8Surfing the Tsunami survey | Most impacted industries
The industries most affected by the Covid-19 are the automotive, fashion & luxury and the non-food retail
Q3: WITHIN YOUR PORTFOLIO COMPANIES, WHICH ARE THE SECTORS MOST IMPACTED BY THE PANDEMIC?
%
50
46%
45
40 38%
35 33%
30
25
21%
20
17% 17%
15 13%
10 8% 8% 8%
5 4%
0% 0% 0% 0% 0%
0
Automotive Fashion Retail (No Others Business Energy Retail Food & Consumer Consumer Industrial Financial Chemicals Packaging TMT/ICT Lifesciences
& Luxury Food) (Construct.) services (Food) Beverages Goods Goods Goods & Services &
(Durable) (Non- Machinery Materials
durable)
Source: goetzpartners interviews and analysis 9Surfing the Tsunami survey | Most resilient industries
The industries with the highest resiliency are lifesciences, packaging and food & beverages and TMT/ICT
Q4: WITHIN YOUR PORTFOLIO COMPANIES, WHICH ARE THE MOST RESILIENT SECTORS?
%
28
26% 26% 26%
24
22%
20
17% 17%
16
13% 13%
12
8
4% 4% 4% 4% 4% 4% 4%
4
0
Automotive Fashion Retail (No Retail Business Energy Consumer Food & Industrial Consumer Financial Chemicals Packaging TMT / ICT Lifesciences
& Luxury Food) (Food) services Goods Beverages Goods & Goods Services &
(Durable) Machinery (Non- Materials
durable)
Source: goetzpartners interviews and analysis 10Surfing the Tsunami survey | Priorities to be addressed
Key priorities are short term challenges as cash management, additional liquidity as well as assure safe working conditions
and minimize supply chain disruption. Notably, longer term strategic initiatives such as digital transformation, business
model re-shaping and strategic road map definition are also perceived as relevant
Q5: OVERALL, WHICH ARE YOUR PRIORITIES TO ADDRESS?
%
70 67% 67%
Short term measure
Strategic measures
60
50%
50
40 38%
33%
30 29%
25% 25%
21% 21%
20
10
0%
0
Cash Worker safety Additional Supply chain Digital Cost cutting Access to Lack of Business model Strategic Others
management conditions liquidity disruption transformation state aids demand re-shaping road map
Source: goetzpartners interviews and analysis 11Surfing the Tsunami survey | Investment continuity
20% of PE funds have de facto frozen the investment activities and origination but more than 50% will actively continue to
deploy dry powder
Q6: ARE YOU ACTIVELY STILL PURSUING INVESTMENT OPPORTUNITIES?
%
55 c.54%
50
45
40
35
30
c.25%
25
20
15 c.13%
10 c.8%
5
0
No Yes, in very limited way Yes, in limited way Yes
Source: goetzpartners interviews and analysis 12Surfing the Tsunami survey | Key challenges for new investments
Uncertainty and perceived risks represent the key issue for new investments right now
Q7: IF YES, WHICH ARE THE DIFFICULTIES YOU ARE EXPERIENCING WITH YOUR COUNTERPARTS?
%
70
63%
60
50% 50%
50
46%
40
30 29%
20
10
4%
0%
0
Uncertainty and Valuation expectations No in-person meetings Current trading Lack of information Securing financing Others
perceived risk and slowdown in (e.g., revised budget or
negotiation revised business plan)
Source: goetzpartners interviews and analysis 13Surfing the Tsunami survey | Most attractive industries to invest in
In the next months TMT/ICT, lifesciences, business services, food & beverages, packaging and industrial goods and
machinery will attract new investments
Q8: IF YES, WHICH ARE THE MOST ATTRACTIVE SECTORS YOU WILL CONSIDER FOR NEW INVESTMENT
OPPORTUNITIES?
%
60
52%
50 48%
43%
40 39%
35%
30%
30
20 17%
13%
10 9% 9% 9%
4% 4%
0% 0% 0%
0
TMT / ICT Lifesciences Business Food & Packaging Industrial Chemicals Financial Energy Fashion Other Consumer Consumer Retail Retail Automotive
services Beverages Goods & Services & Luxury (please Goods Goods (Food) (No food)
and Materials specify) (Non- (Durable)
Machinery durable)
Source: goetzpartners interviews and analysis 14Surfing the Tsunami survey | Changes in planned exit decisions
Q2 will see a sharp slowdown of the exit processes and 50% of the planned exit decisions will be postponed in 2021
Q9: CONSIDERING YOUR PRE-COVID-19 EXIT PLAN, ARE YOU PLANNING TO POSTPONE IT?
%
40
38%
30 29%
25%
20
10 8%
0
No Yes, in H2 2020 Yes, in H1 2021 Yes, in H2 2021 or later
Source: goetzpartners interviews and analysis 15Surfing the Tsunami survey | Impacts on companies' valuation
PE funds’ managers expect a decrease of multiples and companies valuations in the coming months
Q10: OVERALL, WHAT COULD THE IMPACT BE ON COMPANIES' VALUATION GOING FORWARD COMPARED WITH
THE PRE-COVID-19 SITUATION?
%
70
c.63%
60
50
40
30
c.25%
20
10 c.8%
c.4%
0%
0
Really Negative Negative Negligible Positive Strongly positive
Source: goetzpartners interviews and analysis 16Disclaimer This presentation has been prepared by goetzpartners S.r.l., Milan, (hereafter referred to as "goetzpartners") exclusively for the benefit and internal use of the recipient and does not carry any right of publication or disclosure to any other party. This presentation is not and must not be considered as a prospectus. Neither this presentation nor any of its content may be used for any other purpose without the prior written consent of goetzpartners. The information in this presentation reflects prevailing conditions, to the best of our knowledge, as of this date, all of which are accordingly subject to change. In preparing this presentation, goetzpartners has relied upon and assumed, without independent verification, the accuracy and completeness of all information from public sources or which was otherwise reviewed by us. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, goetzpartners, its members, directors, employees, representatives, and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this presentation or for any decision based on it. © 2020 goetzpartners. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of goetzpartners.
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