The Banker - Agenda | Capital Markets
Read the interview to Andrea Vismara, CEO at Equita, edited by Marie Kemplay and published on the "Agenda" of The Banker - the monthly international financial affairs publication of Financial Times.
The chief executive of Italian independent investment bank Equita tells Marie Kemplay how it is ready for growth opportunities outside of its domestic market.
In an investment banking and capital landscape within Europe where the underserving of the continent’s small and medium-sized enterprises (SMEs) is an often-discussed theme, the Italian independent investment bank Equita is determined to serve this market, in addition to larger clients.
Andrea Vismara, chief executive of Equita, believes this group is overlooked by large US banks which have come to dominate the European investment banking landscape, and that there are no longer any “European champion” banks. He says, “It is really down to the few profitable and efficient players who can cover both the large caps and the small guys” to serve this group.
Mr Vismara describes Equita as a “rare example of an old-style independent investment bank”, which were plentiful until a couple of decades ago. Its model is very relationship-based and “centred on sales and trading, advisory and a little bit of asset management”.
Strength in independence
He believes that Equita’s independence, particularly within an Italian context where hefeels the market is dominated by largeinvestment banks, gives it a unique position. “The research that we publish and our judgement is not constrained by existing relationships with shareholders, so we do what we think is right. And our clients appreciate our independence of thought,” he says, adding that “when we advise companies, we’re very careful about our reputation.
The company’s results during 2020 certainly suggest a strong vote of confidence from clients during a challenging period. In the nine months up to end-September, its net revenue was up 25% year-on-year and net profits increased by 56%. Mr Vismara puts the strong performance down to keeping close to clients throughout this period and proactively seeking to provide an up-to-the-minute understanding of the Italian markets to international players and corporates, as well as its involvement in a number of prominent transactions, including acting as an advisor in Intesa Sanpaolo’s takeover of UBI Banca. And because Equita does not engage in any lending activity, it has not been bogged down in any provisioning or non-performing loan issues.
Mr Vismara is keen to capitalise on this performance to generate further growth over the coming years.
“We will end 2020 with an improved reputation and higher market share, and well placed to take advantage of the growing confidence of entrepreneurs and managers going into 2021 to undertake strategic projects,” he says. “We’re fairly optimistic that with the overall economic outlook improving and, with our positioning in the market, we will do well next year. And then hopefully, we will also have the opportunity to look around for further growth opportunities.”
In November 2019, Equita published an ambitious three-year strategic plan. Despite the difficulties of 2020, Mr Vismara is pleased with how the bank is performing against that. He cites key opportunity areas as the anticipated continuation of the consolidation trend within European banking, with Equita being a leading player in advisory on such transactions — a current example being its involvement as an advisor to Credit Agricole on its tender offer for Italian bank, Credito Valtellinese, as well as opportunities within mergers and acquisitions (M&As) more broadly.
In July, Equita acquired the Italian M&A boutique advisory firm K Finance, further cementing its position as a leading M&A advisory firm within Italy. Mr Vismara is optimistic that this acquisition, and the additional resources it offers will provide the opportunity not only for “further growth within our domestic market, but also the opportunity to expand into Europe”.
Expansion in Europe
Mr Vismara returns to the theme of SME clients as a target growth area, believing that wide coverage at a European level is needed in order to be able to truly serve this group efficiently and profitably. He contrasts this with Equita’s current coverage, which “is mostly Italian and some European companies” at present. However, he is hopeful that there will be consolidation opportunities with other players which will allow the group to expand its European reach. Although there is nothing specific on the agenda right now, he observes that the environment for European consolidation is “accelerating”, so he expects there to be opportunities on the horizon which Equita will “actively consider”. He says: “We will also accelerate in that regard. But clearly we have to be very systematic and careful, and make sure that we choose opportunities that create longterm value for all stakeholders, not only on the financial side but also in a wider sense.”
He again cites the recent acquisition of K Finance as an example of an acquisition with wider benefits. The purchase enabled Equita to become part of Clairfield International, a global network of corporate finance boutiques, of which K Finance was one of five founding members in 2005. Being a part of the network will strengthen Equita’s ability to execute cross-border transactions.
“That whole concept of serving the European mid-market is a potential area for us to expand and to consider whether it would make sense for us to progressively become a European player,” he says. “There are very few players who can do that in Europe. There are many large European banks, many large US global banks, but very few profitable and efficient European players that can operate in the mid-market segment. There could be an opportunity for us to build something that has more ambition and more geographical reach.”
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