The instrument of private equity in Italy, France and Russia: a comparative analysis from the investors’ standpoint

Abstract

The work carries out a comparative analysis of the performance of the private equity activity in the following markets: - Italian market; - French market; - Russian Market. The focus of this dissertation is to explore how the same instrument, private equity, is perceived in these different markets and thus how the investors react and commit themselves and their financial resources and managerial expertise to this activity. The choice to analyse these specific markets lies in the fact thatI had the opportunity to take part to two student exchange programs, having the possibility to collect the relevant data in loco (France and Russia). This research compares realities that have different historical and cultural backgrounds, which in turn will obviously affect how an individual poses himself towards the same instrument under analysis. By analysing these markets, it is possible to understand in which sectors the investors prefer to address their resources and thus to have an insight of the contribution to the development of the firms and the national economy as a final effect. The first part of this research is a theoretical approach to the private equity activity, and therefore the main characteristics of this instrument are analysed. The reasons that lead the firms and the investors to commit themselves in this activity are analysed. Moreover, a description of the benefits and the problems linked to the private equity activity are studied. They are general consequences of the private equity activity. The second chapter focuses on the study of alternative resources to long-term financing of the firms. The private equity falls into the equity category. The third one describes the general structure of the private equity, and thus both categories of general and limited partners (investors) are analysed. The second part is more analytical and it is carried out from the standpoint of the investors. The main purpose is to analyse each of the three markets along the fundraising, investment and disinvestment activity dimensions. An historical reference of the birth of the private equity and its development in each of the markets under analysis is provided for two reasons. One is in order to better understand the evolution of this activity over the years and the other is because it leads us to better comprehend the nowadays activity of the investors. The purpose of the analysis of the European market is to better understand the position, and therefore the collocation of the Italian and French markets in the European context. The analysis of the three markets highlight the propensity of the investors to invest primarily in their own countries, thus supporting their national companies and contributing to fostering their national economies. In Russia and Italy, the presence of the institutional investors in 2017 has been remarkable. This presence in the Italian market could be explained by a changing in the economic policy of the country, on the other hand, the presence of the State in almost every aspect of Russia has always been the benchmark between Russia and the other countries. A relevant difference between, on one hand the Italian and French market, and on the other hand the Russian one, is the more recent introduction of this activity in this latter country (compared to the other two markets under analysis, which are more mature). A turning point in the Russian economy can be traced back to the so famous reform called “Perestrojka” (1987) implemented by Mikhail Gorbatchev. However, for a more openness of the firms in deciding whether to finance their projects with one financial instrument rather than another, we have to wait until after the fall of the Soviet Union. Since then, the use of this instrument has increased enormously. The conclusion of the research focuses on the comparison (similarities and discrepancies) of the Italian, French and Russian markets.