Influential tax law firm Tremonti Vitali Romagnoli Piccardi e Associati made history in their native Italy earlier this year when they assisted and advised a group of private equity firms in a leveraged buy-out (LBO) of one of the country’s most strategic banking entities (the first time such a deal in Italy had been sealed). Here international tax adviser Cristiano Garbarini, who was instrumental in bringing the deal to fruition and the recipient of our 2015 Business Worldwide Deal of the year Awards, gives us a more detailed run-down of events.

What was the Deal?

It was the acquisition of Italian banking entity Istituto Centrale delle Banche Popolari (ICBPI) by private equity firms Bain Capital, Advent International and Clessidra. In addition to the bank, the credit card business (run through a subsidiary called CartaSì) was also included. This was a historic acquisition because it was the first time such a large banking entity had been bought by public equity.

Another fact which made the deal important was that, at around 2.15 bn euro,  it was one of the largest private equity deals the country had witnessed this year (and in fact, over the past several years). A final authorization from the European Central Bank and the Bank of Italy is pending, but the transaction is fully expected to be completed by the end of 2015.

What particular part did you and your team play in securing the deal?

Our role at Tremonti Vitali Romagnoli Piccardi e Associati was to oversee the structure of the entire acquisition. This meant liaising and closely co-operating with each law firm dealing with the regulatory and financing aspects of the transactions on behalf of the sponsors.

Considering the first-of-its-kind character of the deal, defining a structure that worked well from a business, commercial, legal and regulatory standpoint has proved extremely complex. In this respect, our approach here at Tremonti Vitali Romagnoli Piccardi e Associati in private equity deals is somewhat different from that of other tax law firms ie we believe our team’s role involves a comprehensive understanding of the deal and its various aspects.

In other words, when it comes to private equity deals in general (for which we have a solid and growing track record) we do not see ourselves as simply tax advisors, but more generally as business advisors engaged in a 360 degrees analysis and armed with a strong problem-solving attitude.

Was it a complex deal to negotiate? If so, why? And how did you overcome any challenges along the way?

As mentioned in the answer above, the fact that the target was a regulated entity implied that, unlike in typical private equity, we had many regulatory aspects to take into account. This took time and required the necessary expertise for each sector.

Moreover, being a competitive bid, we had to be extremely careful not to incur any inefficiencies in the structure as obviously this could have impaired our competitiveness vis-à-vis the other bidders.

If you were to do it all again would you have altered your strategy or performance in any way?

No, not at all. As far as I was concerned our team, which specialises in private equity, was very focused right from the start. Our strategy worked well and the team never faltered. We really did put all possible efforts into achieving our goal for our clients. I’m glad to say it went as we had hoped it would.

How do you see the future (end of this year and 2016) in your line of work in this rapidly moving sector – both on a company and national/international level? 

The activity of private equity firms in Italy seems to be pretty intense at this moment in time and we fully expect to see a lot of deals being made in the near future. It seems there is currently a strong international interest in Italian assets. This is assisted by the fact that the Italian economy itself is starting to recover –particularly within the past year or two.

Many long-time investors have left and new international blood in private equity terms has entered the market and taken their place. The latter are tending to focus on small to medium-sized business. Since Italy has more SMEs than anywhere else in Europe this certainly makes sense.

The Italian hotel sector alone saw investment of 600 million Euro this year with Milan and Rome proving extremely popular. The majority of finance came from the Middle East (Qatar and Abu Dhabi) with Chinese investors too beginning to move in (despite – or maybe because of – their own country’s troubled economy).

Italian luxury fashion too also on the up – again, thanks to the involvement of private equity. In the past the two sectors (fashion and PE) tended to shun each other but they have now become close bed fellows, particularly within the past year or two. Private equity purchases in the fashion sector include Cavalli, Valentino and a stake in Versace. The luxury market, now worth 230 bn euro has actually doubled in size within the past 15 years thanks to private equity and, once again, the interests of Chinese investment.

Company Profile

Regarded as Italy’s top tax law firm, Tremonti Vitali Romagnoli Piccardi e Associati currently boasts seven partners in the publication Chambers Europe. The company advises on legal and tax matters to a global clientele. Founded at the beginning of the 1980s by Giulio Tremonti, it currently employs around 50 lawyers and accountants.In addition to corporate and M&A and banking & finance, the company also covers real estate transactions, transfer pricing and tax litigations.

About Cristiano Garbarini

A partner at Tremonti Vitali Romagnoli Piccardi e Associati, Garbarini graduated from the University of Geneva in 1999, gaining a PHD in International Tax Law four years later. He was admitted to the Italian Bar in 2002.

In addition to International Taxation, Garbarini also focuses on Corporate and M&A as well as Banking, Finance and Capital market taxation. He is a member of the Master Tax IPSOA, AIFI Copmmissione Tax & Legal and the International Fiscal Association.