By Camilla Cameroni
Pietro Masera is a director at Cerved since January 2013 and works in the structured finance division. Cerved S.p.A. is a group based in San Donato Milanese that deals with credit information (managing the risks and opportunities inherent to commercial relations), investors relations and also offers marketing solutions and credit management to help banks and businesses throughout the entire process of collecting non-performing loans or unpaid receivables and the assets related to them. Prior to Cerved, Mr. Masera worked at CVC Capital Partners – established in 1981, CVC is a world leader in private equity with $80.5 billion in assets under management and a global network of 24 local offices across Europe, America and Asia Pacific. CVC’s private equity platform is comprised of four strategies: Europe/Americas; Asia; Strategic Opportunities; and Growth Partners.
On behalf of BSPEC, I would like to thank you for accepting our informal invitation to this “Coffee Break with”. Can you please introduce yourself and tell us about your professional and academic background that led you to become a Director at Cerved?
Hello everybody and thank you for inviting me to this “Coffee Break with”. I have an international background as I did my high school studies in the US and then I studied engineering at Georgia Institute of Technology. After one year at Georgia Tech, I discovered that engineering was not for me, so I returned to Italy. However, at the time only the University of Bergamo accepted my US high school diploma, and so I graduated in economics at Bergamo. After I completed my bachelor studies in Bergamo, I underwent a 4-year training program at UBS where I spent 2 years learning about corporate lending and structured finance and then 2 further years learning about M&A. I was really passionate about M&A and I subsequently joined the M&A team at UBS spending 2 years there. I then worked at Deutsche Bank’s M&A division for 3 years. In total, that gives me about 5-6 years of experience in M&A.
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?
Quite frankly, I had no idea what private equity [PE] was when I was studying. At the time, PE was not as “marketed” to students as it is nowadays. For example, now you can easily find a course on M&A or private equity at Bocconi, whereas 20-30 years ago, even CFOs or investment bankers would take notes because they didn’t know what PE exactly was.
In 1996, when I started working, I had no idea of how investment banking [IB] worked; I only learned with experience as time went by, just like many other people did in those years. Specifically, I had my first contact with PE when I worked at Deutsche Bank: at the time, I worked on a lot of projects regarding IPOs, M&As and PE funds and I received an offer from one of the PE funds I eventually joined, CVC Capital Partners.
Remember, I began my undergrad in engineering: PE was definitely a career path I had not planned.
What did your previous experience in IB at UBS and, later, at CVC Capital Partners teach you? How was the corporate culture different at UBS and CVC Capital Partners?
PE and IB have some features in common: they are both very stressful and challenging jobs, as the workload is enormous, but they are also merit-based and stimulating, as you get to work together with very smart colleagues. So, on one hand, it is easy to hike to top positions if you deserve it and work hard for it but, on the other hand, mistakes are easily made.
IB’s mainly create value by buying or selling the target after a few months’ work, so investment bankers move to a new project when the deal is closed and the target is sold.
PE is, instead, a very different way to offer value creation, where investors can contribute much more, at “360 degrees”. In a PE deal, the real value creation begins once the deal is concluded. PE deals, with respect to IB, typically have a much longer life cycle, which typically lasts 3 or 4 years and PE deals have a value creation side that is absent in IB deals: investors intervene in the firm management, on its corporate governance and in processes to make the target more efficient.
Throughout your career, is there any remarkable deal that contributed to your personal and professional growth? In particular, can you tell us more about the Pagine Gialle deal?
The SEAT – Pagine Gialle deal certainly had the biggest impact on my professional growth because at the time it happened, it was the largest and most complex deal in Europe: a very complex and very visible LBO which amounted to €5.5 billion. SEAT – Pagine Gialle started out as an amazing investment, then the first problems arose after about 5 years, until it became a disaster after another 5 years.
Pagine Gialle changed its management, refinanced its debt and even restructured its leverage 2 times. The whole deal lasted about 10 years, seemed a successful deal at first, but then turned into “hell” when the board of directors of SEAT – Pagine Gialle was involved in a lawsuit, still ongoing. I am not involved in the lawsuit because I took a seat on the board of SEAT – Pagine Gialle after the “incriminated dividend” was paid on April 21st, 2004.
I honestly was able to learn a lot from the SEAT – Pagine Gialle deal, in each and every phase. By analyzing the deal ex-post, avoidable mistakes were made, but the important thing is that we learned from them. In 2013, I joined Cerved, which I helped to acquire when I was working at CVC Capital Partners. In fact, at the time, Cerved was one of the portfolio companies.
Given your extensive experience in the PE industry, how have PE investment strategies changed over the course of your career? Given the current situation of trade wars and low interest rates, how will this impact PE?
In my opinion, the trade war mainly affects export-related businesses, while low interest rates will have a much larger impact on financial markets. In 2012, when financial markets started to recover from the 2008 crisis, interest rates were gradually reduced. As a consequence, there was an increase in capital available to be invested in PE deals, prices of deals surged and even the risk in deals increased. I honestly believe that when the next financial crisis will hit the markets, many investors will be hurt because nowadays, my colleagues that work in PE are under pressure to invest as much capital as available, yet their investments are getting riskier and riskier.
What advice would you give to our readers that are willing to embrace a career in private equity?
Looking back at my career path, I can say I have been very lucky and these are my personal suggestions. First of all, be ready to work hard and sweat, as it is the only way to advance in your career.
Then, remember that the experience you get by working for some years in IB is unique and needed to work in PE. As I mentioned before, the work environment in IB is challenging but you learn a lot and, most importantly, you get exposed to ambitious, strongly motivated and smart people. I would discourage you to go straight to a PE fund without getting some experience in IB first, because then you would either end up in the wrong PE fund or you would be too young and inexperienced to have a meaningful role in the deal. When working in PE, you learn less with respect to M&A; as a junior investment banker, you work on about 20+ deals, while that same time spent in PE you experience about 5 deals and you certainly take away less from each of them. It is definitely better to begin your career by working for 2-3 years in IB and then move to the PE fund that was your client as an investment banker. Also, it is very difficult to receive an offer from a PE fund and, once you get an offer, you cannot reject it. CVC Capital Partners, for example, is one of the top PE funds, they are very selective with people they hire, turnover is almost zero and they are only interested in very skilled candidates with at least 5 years of experience in IB. As an alternative to IB, you could also gain relevant experience in consulting. In my opinion, the skills you learn from consulting are very useful but less useful than those from IB. An ideal career path would be, for example, to work for 3-4 years in IB, then another 3-4 years in consulting and then you would be very suitable to a PE fund.
Anyway, I wish you guys all the best and good luck with your careers!