Financials

<h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p class="MsoNormal" style="text-align: justify;">My professional path in Alternatives underwriting and asset management started in the post Lehman crisis, as credit analyst and restructuring manager of corporate non performing exposure within a tier 1 Italian bank. After the banking experience I joined a top notch Italian insurance company focusing on a broader universe of Alternative Fixed Income products, acting as principal investor and in asset manager management of several sub delegated mandates.</p><p class="MsoNormal" style="text-align: justify;">I developed further expertise as financial and real estate advisor on single name corporate restructuring and NPE and REOs portfolios and then tested myself as a manager of such investments on behalf of a credit servicer.</p><p class="MsoNormal" style="text-align: justify;">I am currently part of a private equity powerhouse that diversified also in private debt and commercial banking, such as working capital revolving facilities, and in charge of Special Situations investments.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q2. Who are the main players in the Alternatives investments industry, and what market share or position does each represent?</span></h2><p class="MsoNormal" style="text-align: justify;">Alternatives investment industry is segmented in sub industries such as:</p><ul style="text-align: justify;"><li class="MsoNormal">Private debt, led by Pan-European private equity funds that diversified their core equity investment strategies as well as local players</li><li class="MsoNormal">Asset based lending led by large asset manager groups with banking heritage (commercial real estate, infrastructure, energy, inventory financing, aircraft financing, shipping financing, other leasing investments)</li><li class="MsoNormal">Special situation and distressed financing, where global private credit funds forged alliances with local partners such as credit servicers to manage a huge stock of prior commercial banking exposures</li></ul><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q3. What is the go-to-market strategy for the Alternatives investments industry?</span></h2><p class="MsoNormal" style="text-align: justify;">Specialization is by far the most successful strategy, each sub asset class is complex and very country specific, generalist players do not benefit of significant cost synergies across the investment products array.</p><p class="MsoNormal" style="text-align: justify;">In-depth focus on niches is key to develop a significant track record on such specific sub asset classes and to be attractive for fund raising purposes.</p><p class="MsoNormal" style="text-align: justify;">Furthermore, the deployment of significant AuM is directly connected to senior management underwriting skills and constrained business time that does not allow a fast scale up of multiple investment resolutions on different sub asset classes simultaneously.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q4. What is the current demand / volume in the market? How are key players adapting?</span></h2><p class="MsoNormal" style="text-align: justify;">Demand is steadily increasing since traditional lending new inflows are quite stable and European banks are still conservative in their lending policies.</p><p class="MsoNormal" style="text-align: justify;">For special situation and distressed financing most of the banking stock has been object of a first round of deleverage by the originators and a secondary market take up is undergoing.</p><p class="MsoNormal" style="text-align: justify;">In addition, a niche market for new asset backed money in going concern contexts is gaining further traction, both through long term mortgages backed by real estate assets or short-term facilities backed by the true sale of trade receivables (i.e. factoring).</p><p class="MsoNormal" style="text-align: justify;">Infrastructure and energy have a direct benefit of public funds such as Next Generation EU (NRRP) and increasing demand for ESG compliant investment deployment.</p><p class="MsoNormal" style="text-align: justify;">Private debt is another lively niche for sponsor backed buy out transactions or capex financing for high yield, but still performing, borrowers.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q5. What are the best growth opportunities in the Alternatives investments market, and why?</span></h2><p class="MsoNormal" style="text-align: justify;">Asset based and specialized lending are the most sought after transactions.</p><p class="MsoNormal" style="text-align: justify;">It is a direct consequence of both the aforementioned specialization and underlying industry focus trend and of the need to improve the risk adjusted return profile in a still high-interest rate scenario and limited business growth that make not sustainable for most of the corporates a mid-teen double digit debt service.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q6. Are there any mergers and acquisitions/consolidation that are expected in the industry?</span></h2><p class="MsoNormal" style="text-align: justify;">Special situation and distressed financing have been subject of an important M&amp;A wave and consolidation of the local partners, where most of the international asset manager have bought and aggregated country-based credit servicer.</p><p class="MsoNormal" style="text-align: justify;">In Italy for instance the credit servicing market is dominated by two players recently consolidated and prior asset management companies and shadow banking institutions are acquiring banking licenses to become full banking entities, the so called &ldquo;challenger banks&rdquo;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><p class="MsoNormal" style="text-align: justify;">Since Alternatives investment require a multi-disciplinary skill set the critical question is definitely the quest for talent, how to attract, retain and train skilled professional that can boost the underwriting and management decision making process and foster the scale up of deployment pace.</p><p class="MsoNormal" style="text-align: justify;">In addition, engagement and rewards are the key to preserve the alignment of interest seek by the principal investors with investment managers.</p><p class="MsoNormal" style="text-align: justify;">A forward-looking people management approach is also mandatory to win the forthcoming challenge of leadership generational renewal that the industry will experience in near future.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p>