Tamburi, over 1 billion for investment on the table

Yes, that is to be avoided. But how much money does the business boutique have available to carry out the deals? Generally speaking, considering the firepower of the "club deals" themselves, the cash at TIP's disposal is currently around 1.1 billion euro. Funds that can be directed towards potential targets.

First and foremost, beyond the sectors, TIP places at the centre of its selection criteria - along with the validity of the corporate strategy and business - the figure of the entrepreneur/manager of the reality being acquired. Not only that. With regard to sectors, the interest is on areas such as manufacturing, mechanics or electro-mechanics. Provided, however, that the companies in question possess technologies, patents and products that make them a leader with ambitions of growth above the reference market. Finally - it should be stressed - various resources are kept available to the individual investees to support any extraordinary synergetic operations (so-called 'add ons').

So far, some suggestions on potential targets and unlisted companies. But one focus is on the financially stressed companies themselves. Here, in order to understand the concrete strategy, it is useful to recall TIP's corporate purpose. This is an independent group that, in addition to its consulting activities, invests, directly and via club deals (agreements between private entrepreneurs), in minority stakes in listed and unlisted companies. The time horizon of the investment is medium to long term and the strategy, in principle, is to accompany the entrepreneur and/or manager of the investee company, actively supporting them (e.g. with regard to M&A) in their growth and expansion project. With regard to the size of the investment, or the type of target, the group exploits different corporate vehicles. Thus, in addition to TIP itself, there is StarTIP for start-ups in digital and innovation; with respect, instead, to targets with more than 200 million revenues and an equity for the operation over 70 million, there is the intervention of Asset Italia (of which TIP has more than 20%). Not only. Since the end of 2020 Itaca Equity has been established (TIP has a 16.6% share). Well: the latter is precisely the company - active in transactions with realities in financial difficulty - whose operations are expected to accelerate. The era of moratoria and public guarantees, which took risks away from the banks - TIP explains - is over. From which the dossiers for Ithaca will certainly increase.

All roses and flowers, then? The reality is more complicated. Savers express a concern. High deal prices risk holding back the realisation of important transactions. This is a condition, is the fear, that may limit TIP's expansion. The business boutique, calling for a more nuanced analysis, disagrees with the assessment. The group points out that transaction multiples are gradually falling. According to Pitchbook, globally, the ratio of enterprise value to EBITDA of deals was 13.3 times in 2021. Then the indicator dropped to 12.5 in 2022 and, last year, settled at 10.9 times. More. Rising rates, says TIP, have reduced the scope for private equity, and thus, their competition. As a result, the independent group concludes, the space for significant activity exists.

But it is not just a question of prices and quotations. The ECB recently raised the alarm on the financial sustainability of companies in Europe, and in Italy itself, in the face of the macro and market context (high rates and economic slowdown). A situation that, through the investees in its portfolio, could also reverberate on TIP. The business boutique rejects the fear. In fact - the group admits - too many companies are fragile - even in Italy - due to high rates, which, however, will fall not much and gradually. Having said that, however, the company firstly points out that the companies in its portfolio are not very indebted: almost all of them have net debt of less than two times Ebitda. In addition - it is emphasised - these are industrially strong groups and leaders in their sector. Consequently, TIP does not see a particular problem on this issue. Beyond that, however, it can be further argued that the willingness to expose itself more to "distressed" realities, especially in the current context, may make the group's own business more risky. TIP, although aware of the situation, again rejects the fear. First of all because, is the indication, compared to the past - on an availability of about 600 million - Itaca Equity's investments so far are limited to 37 million. In other words: the share of investments, made in a more favourable rate environment, is very limited. Then because, with regard to future prospects, the group claims its ability, on the one hand, to select the right targets; and, on the other, to help them grow or emerge from complex financial situations.

Finally: the share/NAV ratio. TIP's stock, as of 13 February, was trading at a discount of about 35% to the intrinsic value of the portfolio (13.9 Euro) calculated by the same company. This is a high percentage, which wrinkles the nose. The group, on this front, does not agree with the excessive undervaluation of the stock desired by the market. That said, TIP points out that the market itself - not infrequently - moves with the trends. Thus, in 2023, banks and big tech were rewarded on the stock market (also in the wake of the artificial intelligence narrative). Negative, on the other hand, were the mid caps (of which TIP is a part, ed.) that, however, as several investment banks indicate, will be - TIP concludes - rediscovered in 2024.

Net profit
At 30/9/2023 TIP's net profit stood at EUR 73.641 million (it had been 122.7 a year earlier). The comparison, however, is not meaningful as the net result is also an effect of individual portfolio transactions.

Further reading

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