Synergo scans Italian market for pocket multinationals

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Paolo Zapparoli, chief executive of Synergo SGR, which recently acquired Sofipa SGR explains to his criteria for selecting investments.

As a private equity firm managing €1bn through three closed-ended funds, in 2012 Synergo SGR has proved one of the most dynamic players on the Italian private equity and asset management space, announcing acquisitions and confirming plans to invest in emerging markets.

Earlier this year, the Milan-based company launched a fund to focus on investment opportunities in Turkey, signing a deal with the Baykam family. A few weeks later, Synergo made the headlines again, completing the ­acquisition of asset management company Sofipa SGR from UniCredit.

Synergo is headed by chief executive Paolo Zapparoli (pictured) and focuses on growth capital, mature stage, middle market, industry consolidation, recapitalisation and buyout financing. In recent years, Synergo selected several mid-market Italian companies for investment, including Redecam, Waste Italia, Ducati, Cartonplast, Valvitalia and Motovario (see box, next page).

As market conditions remain challenging, Zapparoli told InvestmentEurope which criteria he relies upon to select new investments.

Could you give a brief overview of the company?

Synergo was set up to support successful Italian entrepreneurs through several private equity funds. We focus on mid-market investments, and we have a direct and regular interaction with the management and the entrepreneur. Moreover, we are flexible in the structuring of the deal; we do not make use of financial leverage; and we have an entrepreneurial approach to investing, which companies like.

How do you select investment opportunities, and what do the companies have in common?

We select our investments through both a bottom-up and a top-down process. Each year, we read through more than 200 dossiers and we look for niche companies, managed by charismatic entrepreneurs. We also like companies that are looking to leverage their competitive advantage on foreign markets, and those that generate part of their returns abroad. In other words, we are scanning the market for pocket multinationals.

Which industries offer the most interesting opportunities?

We like pharmaceutical companies, healthcare service companies and more broadly the industrial and manufacturing sectors in which Italian companies are traditionally strong.

The past two years have been challenging for private equity firms. Is the credit crunch over?

Not at all. We still see the number of operators shrinking, both in Italy and abroad. The main challenge is the fundraising process, as institutional investors are sceptical on southern Europe and reduce and consolidate relationships with general partners.

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