Introduction by Alan Lemangnen, Global Markets Research
The situation for Italian banks and the political context in the country overshadowed Italy’s sound economic performances in 2016. Growth reached 1%, confirming the economic recovery that kicked off in the market in 2015 after six years of recession and stagnation. This trend is reflected by renewed investment, which contributed 0.5 point to growth. Households also played their part, with substantial household wealth driving growth in the asset management sector, as housing investment rose for the first time in eight years, buoyed by the rebound in real estate prices.
Restructuring currently under way in the banking sector should shore up the outlook for financing of the Italian economy, while banks’ efforts to clean up their balance sheets and bolster their solvency are also set to pay off in the medium term.
Natixis’ business lines have been operating on the Italian market for a long time, as they work alongside various types of clients to offer a range of solutions and expertise to meet the needs of local customers.
Asset Management: a dynamic industry
The asset management activity has been resilient in Italy (total AuM close to €2 trillion). Net inflows confirmed positive for the beginning of year 2017, with a clear preference for non-domiciled assets and in terms of asset classes: multi-asset & flexible and bonds.
Natixis Global Asset Management model is positioned for growth opportunities based on a distinctive business model within the Durable portfolio construction (DPC) framework:
- The strategy towards institutional clients adopts a sales approach targeting large pension schemes, foundations, insurance companies and cultivating local consultant relationships as well as concentrating on mandates and a limited number of products.
- The distribution strategy focuses on the top banking groups that offer opportunities in multimanagement, wealth management, independent financial advisory and insurance.
In the perspective of creating value for Italian investors in complex markets providing diversified investment solutions, Natixis Global Asset Management has been successfully registering in Italy products from its affiliates Mirova (dedicated to CSR), Seeyond and H20. We gave access to the expertise of Dorval Asset Management in February 2017, as a potential solution to manage risk and build european equity portfolios better suited to today’s market uncertainty.
Two great DPC symposiums in March in Rome and Milan.
The two Durable Portfolio Construction Symposiums taking place in Italy at the end of March were mostly dedicated to pension funds, insurance companies, foundations (Rome on March 28) and to private banks, asset managers, large Italian distribution networks, consultants, gatekeepers and fund selectors (Milan on March 30).
“We have great ambitions for 2020. With our strategic objectives and professional resources, our goal is to gain market share and I believe that the DPC philosophy will bring us there. Our solid bases for our organic business development will be an authentic asset to achieve it.”
Antonio Bottillo, Executive Managing Director, Country Head, Natixis Global AM – Italy
Strengthening strategic dialog with key clients
Corporate & Investment Banking has been running operations in Milan for around ten years and has enjoyed steady growth in its advisory, financing and capital markets businesses of around 10% per year. The business’ ambition is to be a key player on the Italian financial market.
At the start of March, the bank appointed two new company heads in charge of Coverage and M&A with the aim of strengthening the strategic dialog with key clients by offering them a wide range of tailor-made solutions to suit their needs.
The branch enjoyed a highly successful year for acquisition finance in 2016, taking part in two landmark deals: Investindustrial’s (one of the European private equity leaders) acquisition of Artsana, which specializes in baby products, and the refinancing deal for pharmaceuticals group ACS Dobfar.
Meanwhile, on the primary bond market, the bank managed several significant issues such as the dollar-denominated issues for CNH and Salini. In early 2017, Natixis also acted as bookrunner for Enel’s first green bond issue, while on the primary equity market, it played a role in the record €13bn rights issue for Unicredit in February.
Natixis is a key player in financing renewable energy infrastructure, on both wind and photovoltaic power. It recently arranged the largest project bond on the Italian market for Azienda Solare Italiana SpA: the Brainwave project worth €125m. The bank also arranged one of the main Italian real estate finance deals: the acquisition by Antin, ICAMAP and Borletti Group of 100% of Grandi Stazioni Retail, which manages and operates sales and advertising spaces for the 14 main Italian train stations.
On the capital markets, Natixis specializes in structured solutions for its corporate and institutional clients on the Italian market.
An exceptional year for leasing
Natixis Lease opened its Italian branch in Milan in 2005 and since then it has been working with corporate clients of all sizes to provide a broad range of real-estate and equipment leasing services. New production came to €179m in 2016, soaring 118% vs. 2015.
How can we explain this unprecedented performance?
Firstly, we have strengthened our relationship with Groupe BPCE clients. Natixis Lease experts use their in-depth knowledge of financial products and the Italian market overall to meet clients’ requirements, providing an extended range of real-estate leasing and equipment leasing solutions.
Natixis Lease boasts a number of business achievements, including its role in the real-estate lease financing of telecoms operator Vodafone’s building in Italy, used to manage telecoms traffic in southern Europe (€24.2m over 12 years). It also financed the construction of a Bricoman store in Verona for Leroy Merlin, worth €20.1m over eight years.
Several major equipment leasing deals were also completed, such as the financing of Kedrion’s medical plasma processing equipment (€1.7m over five years) and the financing of equipment for the production sites of Piatti Freschi, a Fleury Michon subsidiary (€1.3m over five years).
Some deals would not have been possible without the participation of Groupe BPCE banks: Natixis Lease financed the construction of two nursing home buildings, one in Venice (€15.3m over 12 years) and one in Milan (€15.5m over 12 years) for Orpea Italia, based on the counter-guarantee provided by BRED Banque Populaire worth 50 % of these transactions.
Caisse d’Epargne Rhône Alpes provided a counter-guarantee for the financing of waste collection industrial vehicles for Derichebourg – San Germano (€8.5m over five years).
Caisse d’Epargne Loire Drôme Ardèche also provided a counter-guarantee for the Autajon group’s financing, European leader in packaging and labelling (€17.4m over five years), in a deal initiated by Natixis’ Coverage department in Grenoble.
* Source: Assogestioni, end-January 2017