It's a great pleasure to have Fabio Sattin. Fabio Sattin has an incredible experience within the private equity markets. He founded Private Equity Partners, a great company operating in the private equity sector. He was the chairman of the European Private Equity & Venture Capital Association. He's a great professor here at Bocconi so Fabio, what is, today, the state of the art in private equity venture capital around the world? It's a huge question I know, but coming from your experience… First of all thank you for your introduction, too nice. Yes, today the situation is quite interesting for private equity. Many things are changing. I still believe that today more than in the previous years, private equity is a very important engine for economic growth, especially for Europe in particular, all over the world but also for Europe and also for Italy. But let's speak about Europe, today, one of the key problems we may have in Europe is the great presence of the banking system. As you know the big difference between Europe and the U.S. is the importance that banks have on intermediating any monitor between corporations and savings. I think there is a huge need of creating new financial intermediaries, not-banking-related financial intermediaries that have, let me say, fundamental skills, that have specific knowledge on companies and on development programs, and I think private equity players is a category that has developed throughout many as in Europe, those kind of skills which are today very important, so I think that the various forms of will be very important for European growth. Today, I think we should also include together with private equity what we call private debt. As you know, a lot of private equity companies are also developing private debt activity. Overall it’s a very important sector for European growth. Europe and the U.S. seem to be to different stories, so it’s what you mentioned before, they are really two different stories about private equity. Let’s say yes, there is a kind of “European way” to private equity and I’ll always remember the ambassador of Italy coming from the U.S. Mr. Spogli is and used to be a huge player in the U.S. private equity market, and when he arrived in Italy and in Europe, he understood that it was a different market. Why? Because Europe is a continent with a lot of family owned companies. In Europe, private equity, except in the U.K., has developed throughout different roots. In many cases, private equity is in a minority position supporting entrepreneurs in developing their company. So, it's a different manner to approach private equity. In Europe, we have a lot of minority investments: The so-called growth capital investments. So, I think that private equity has adapted in Europe and also within Europe in each specific country, because you also have country by country differences. Certainly it is different when compared to traditional private equity in the U.S. I worked in the U.S. before coming to Europe so there was a huge difference in the approach. Let me say that, especially in continental Europe, private equity players play a very important role in supporting companies and supporting generational change. So, yes, there is a different manner to approach private equity, and, I think, in Europe, is a quite sound manner. What are the key trends of the private equity industry today? Today is a moment of change in private equity, certainly. After 2009, after the crisis as with many other sectors, private equity also had to review, a little bit, its strategy. First of all, there is a problem at the fundraising level. I think the traditional fund structure is struggling a little bit as of today. We see a lot of the new investment structures coming out, like club deals, co-investments, direct investments, and SPAC: special purpose acquisition. There are a lot of different structures which are adapting themselves to the needs of the market and to the investors. Another big problem is the fee structure. Traditional fee structures that are mainly based on fees calculated on committed capital is not so popular anymore. Let me say it that way. More and more, investors want to pay fees on the invested amount. A lot funds are also reviewing the fee structure in order to match this new requirement. On the other hand, we have a lot of sovereign funds, which are starting to invest directly, mainly in companies. The largest investors are not going through the private equity players anymore. But, they are going directly to the market or via co-investment agreements. So there are a lot of changes in the investment structures. On the deal, I mean, it's always the same. I mean, the key targets in Europe are SMEs, statistically. In Europe, we have approximately 45 billion invested each year out of 5000 ~ 5500 companies. And the, I mean, the attitude of entrepreneurs of involving private equity players on their strategy is increasing. Probably, we will do private equity in the future with different structures, with different economic conditions, but I mean in a larger amount including also as I said before private debt that is still also in Europe being an important area of the private equity market. The industry is changing? So new strategies you mentioned, private debts also different stories, so majority investment in the U.S., minority in a certain sense in continental Europe, we don't have the crystal board bets. How do you see the market in terms of strategic choices made by the major players or the relevant players as you are for example in the market. I mean, certainly one of the key elements, is that in Europe you don't have deals of a large dimension, first. Second, minorities, probably, as I said before, will still be a great part of the market. Probably now I think from the investor's point of view, from the private equity firm’s point of view they have to increase their industrial skills. A lot of private equity houses are adding to their traditional stuff. Also industry experts are, in order to increase their industrial know-how. Let me be precise on this point. I personally do not believe that private equity has to substitute management. A private equity investor is an active owner, not an active manager. Just to be clear, the role of the private equity investor is an active investor of active shareholder roles. You don’t have to overlap management. But even if you have active investors and active shareholders, it’s absolutely necessary to increase the understanding of the company or the sector in order to really help a company in developing and deploying its development strategy. So even staying in its own role, not overlapping with management, but even with this role increasing industrial know-how is very important. That is one of the key elements for the future of private equity. Thank you very much, Fabio. Thanks very much for your time. Thank you to you Stefano. Thank you to you.
