In April 2006, Eurazeo acquired a 20% equity interest in Gruppo Banca Leonardo and announced the creation of Euraleo, a 50/50 joint venture alongside the Italian company.

Euraleo is a private equity firm based in Milan that specializes in the Italian market. It combines Eurazeo’s private equity know-how and experience with Gruppo Banca Leonardo’s indepth knowledge of the Italian market.

Euraleo’s team identifies and analyzes potential investment opportunities, and submits them to its investment Committee. This committee comprises Euraleo’s Chief Executive Officer, two representatives from Gruppo Banca Leonardo and three from Eurazeo, which thus has the deciding vote in a tie, reflecting Eurazeo’s preponderant role in evaluating and analyzing potential investments, monitoring completed investments and developing exit strategies. All investment decisions require a consensus by the two partners and Euraleo’s staff monitors the investment portfolio under the supervision of the firm’s investment Committee.

The bulk of the equity financing of investments is provided by Euraleo, with Eurazeo and Gruppo Banca Leonardo each funding half of its equity. There is also the possibility for other investors (and in particular certain shareholders of Gruppo Banca Leonardo) to take minority positions alongside Euraleo.

Euraleo’s investment criteria are identical to those of Eurazeo in terms of the quality of the management teams, barriers to entry, profitability and recurring cash flows. Given the nature of Italy’s business landscape and preponderant role of small and medium-sized businesses, however, Euraleo has smaller-scale investment objectives. It has set its minimum equity investment at between 50 and 70 million euros, while the maximum investment amount is consistent with that of Eurazeo. Euraleo may even take minority positions alongside entrepreneurs or other private equity investors, provided that appropriate governance is in place.

In contrast to France, Italy’s private equity market is small, as there are fewer large conglomerates and more family-owned companies. Yet since its creation, Euraleo has identified a substantial number of potential investment opportunities, and of the more than 30, around 10 have been reviewed in depth.