By Camilla Cameroni
Oxy Capital is a Private Equity firm that was founded in Portugal in 2011 and employs a global workforce of more than 30 professionals. The Milan office was opened in 2014 and currently operates with a team of 12 professionals – of which include the 3 founding partners who have a cumulative +50 years of experience in Management Consulting and Turnarounds.
Oxy Capital operates in partnership with both investors and creditors, through innovative schemes in order to align the interests of all parties involved. Additionally, it supplies necessary financial and human resources to relaunch businesses that are distressed yet still exhibit investment potential. Oxy Capital typically assumes a controlling stake of the companies in which it invests. Target companies typically display revenues ranging between EUR50m and EUR500m and net debt levels of 5x to 20x EBITDA.
On behalf of BSPEC, I would like to thank you for accepting our informal invitation to this “Coffee Break with”. Would you present yourself with a brief overview of your professional and academic background?
It is a pleasure for me to share my experience, especially with students that are interested in pursuing the same career as I did. I graduated from Bocconi China MiM program in 2017. After my Master, I worked as an intern in hedge funds in Shanghai and London, then at UniCredit. Finally, I joined the Private Equity firm Oxy Capital about one year and half ago.
When you were a student, did you already know that you wanted to pursue a career in Private Equity? How did your specific interest for Private Equity begin to grow?
Private Equity was my personal ambition from the very beginning since I started my Master studies. The Private Equity industry was appealing to me since it requires both managerial and financial competences to be cultivated simultaneously. In particular, I grew my interest for PE reading newspapers and networking with people that work in the industry.
Now you have graduated and have been working in a PE fund for two years. Would you go back to college and pursue a different Master, maybe something more quantitative, such as Finance?
In my career, I have never felt I had knowledge gaps because of my managerial background. Furthermore, the internships I did in the hedge funds in Shanghai and London improved my financial skills. In addition, while working at UniCredit, I was part of the NPE [Non Performing Exposures] team, which was in charge of reducing the bank NPL [Non Performing Loans] positions through restructuring processes. While interning at UniCredit, I learned about project management but I also had the chance to work “hands- on” on a project called FINO, which consisted of transferring an EUR18bn portfolio to PIMCO and Fortress.
However, I honestly do not consider the Private Equity industry as purely consisting of finance and modeling. For example, once that PE firms invest in a company, the next step is to make the company turnaround or grow. In fact, most of my colleagues have a strategic consulting background, they mainly have previous work experiences in consulting firms such as McKinsey, rather than Investment Banks.
Please tell us more about your everyday activities at Oxy Capital. How would you describe your responsibility in the firm? In particular, which tasks do you enjoy the most?
As an analyst at Oxy Capital, I could be involved in either a due diligence or in projects that deal with the fund’s portfolio companies. The task I’d rather do overall is modelling, but as time goes by, I am gradually becoming aware that the best way to learn about investing decisions is by understanding the business itself – and the only way to fully understand the business is by getting close to the companies and “touching them with your hands”.
How is the fund you work for, Oxy Capital, different from the rest of the funds?
Oxy Capital is the Italian leader in turnarounds, so the fund mainly focuses on financial restructuring and industrial turnaround for the portfolio companies. In particular, Oxy Capital is specialized in “hard restructuring” and the way it adds value is specifically through the “hands-on approach”, which consists in only majority investing in order to lead the turnaround and completely flip the company.
Throughout your career, is there any remarkable deal that contributed to your personal and professional growth?
So far, the main deal I was involved in was the investment of Oxy in Manuli Stretch, in partnership with Elliott. The Manuli Stretch was the typical Private Equity restructuring operation: the target company was over-levered and its industrial performance in the previous years was decreasing so much that there was a risk of contract covenants not being respected and of debt not being repaid. Private Equity comes into play in order to restructure financial debt and to guarantee positive cash flows again by a “hands-on” approach and a proactive management of turnaround.
What are the procedures used by your firm when choosing the ideal target?
As most restructuring Private Equity firms do, Oxy Capital usually targets over-levered companies, whose Net Debt/EBITDA >3x. Moreover, Oxy Capital would typically look for target companies that are leaders in their industry and have high potential for turnaround.
With respect to the Italian market nowadays, what is your opinion about the Private Equity industry? How do you expect it will develop in the next years?
I believe that AUM [Assets under management] in Italy have been increasing in the past years and the Private Equity industry is becoming more institutionalized accordingly. However, the potential for Private Equity in Italy is still enormous and not fully exploited. Just think about the restructuring process, for example: Italian banks still own circa EUR90bn of UTP [Unlikely to pay], but the recent regulatory changes, such as calendar provisioning and IFRS9, give Private Equity firms a lot more investment and management opportunities without banks taking the risks of additional losses.
What advice would you give to our readers who are willing to embrace a career in Private Equity?
First, it is all about the attitude you show: try to always be informed, curious and committed to pursue your goals. Second, in my opinion, your academic background matters only partially, as long as you always aim to reach the best results possible; so for example, it is not mandatory to have a Master in Finance to work in Private Equity. Third, you may want to enrich your background with useful work experiences, but also studying abroad. Both give the opportunity to confront a dynamic and competitive environment. I would especially suggest an internship in consulting, banking or finance as they can better prepare you to enter in the Private Equity world. In addition, an MBA in one of the best ranked schools would also provide you with an extensive network and thus further help you approach the Private Equity industry.
Finally, don’t underestimate Bocconi. In fact, Bocconi offers a lot of opportunities to learn from and relate with top professors. Just choose relevant optional exams in the second year or try to write a challenging Master thesis, for example about Private Equity, valuation or alternative investments.
Best of luck!
Editor: Eric Peghini
Author: Camilla Cameroni