Italian Institutional Investors Deepen Commitment to Private Markets

Italian institutional investors are maintaining a firm allocation to private markets, with buyout, venture capital, and growth capital strategies at the centre of demand — even as the domestic fundraising environment hit one of its weakest stretches on record in the first half of 2026.

The divergence between resilient investment activity and strained capital-raising underscores a structural tension in Italy's private markets ecosystem: deal flow remains robust, but the domestic investor base is not yet generating the fundraising volumes the market needs to sustain its own growth. For institutional allocators — from pension funds and insurers to private banking networks — the strategic case for private equity and private credit remains intact, but the path to scaling it domestically is proving difficult.

What happened

In the first half of 2026, total private equity and venture capital investments in Italy reached €5.1 billion, a decline of just 2% compared with the same period of 2025, according to data presented by AIFI (Associazione Italiana del Private Equity, Venture Capital e Private Debt) and PwC. The number of transactions fell more sharply, to 291 deals, down 21% year-on-year.

Buyout was the dominant strategy by invested amount, accounting for €3.3 billion across 69 operations — more than six times the volume of the next-largest category, infrastructure, which attracted €1.1 billion. Venture capital, by contrast, led by deal count, with 188 transactions recorded in the half, reflecting the higher frequency but smaller ticket size typical of early-stage investing.

Disinvestments in the same period totalled €1.2 billion, a 57% decline in value year-on-year, though the number of exits rose 7% to 76 transactions — a sign that managers are completing more, if smaller, realisations.

• Total investments H1 2026: €5.1 billion (−2% vs H1 2025), 291 deals (−21%)
• Buyout: €3.3 billion, 69 deals — first by amount
• Infrastructure: €1.1 billion — second by amount
• Venture capital: 188 deals — first by deal count
• Disinvestments: €1.2 billion (−57%), 76 exits (+7%)
• Domestic fundraising: €674 million (−60% vs H1 2025)

The fundraising crisis

While investment activity held broadly steady, the fundraising side of Italy's private markets told a sharply different story.

Gervasoni noted that the figures exclude capital raised by pan-European funds, which continue to represent a significant portion of the market. Nevertheless, she stressed that a domestic fundraising market of this size is unsustainable: "È ovvio che però un mercato domestico così non va bene," she said, adding that AIFI is actively engaging with insurers, pension funds, and private banking networks to stimulate domestic capital formation.

Why international operators dominate — and what domestic managers contribute

International operators accounted for 72% of total invested volume in H1 2026, continuing a long-standing pattern in which foreign funds drive the bulk of capital deployed into Italian companies. Seven large and mega deals were closed in the half, with several more reported in July — a month Gervasoni described as "brilliant" — suggesting the full-year figure may recover.

Domestic managers, however, remain the backbone of deal count. Smaller, locally sourced transactions make up the majority of the 291 operations recorded, and Gervasoni underlined that this is not a marginal contribution: "A numero il mercato è fatto da operatori locali, deal più piccoli ma molto importanti." The implication is that domestic fundraising is not merely a question of prestige — it directly determines how many companies, particularly smaller ones, can access private capital.

The structural gap: too few large domestic operators

A recurring theme in AIFI's analysis is the absence of large-scale Italian fund managers capable of anchoring the domestic market. Gervasoni was direct on the point:

"In Italia abbiamo troppi pochi operatori di dimensione significativa per dare stabilità al mercato e quindi è un mercato in cui pochi operatori grandi quando entrano in raccolta spostano le statistiche, mentre ci sono un numero significativo di operatori piccolini che fanno fatica."

— Anna Gervasoni, Director General of AIFI, at the AIFI–PwC H1 2026 data presentation.

She argued that consolidation among existing managers could produce the "national champions" the market lacks, and that Italian operators have the skills to compete internationally — as evidenced by their activity abroad. The regulatory framework, she said, is adequate; the missing ingredient is a stronger domestic fundraising base, which in turn is a prerequisite for credible international capital-raising.

A decade of growth — but still behind European peers

A separate study published by Banca d'Italia in October 2026, authored by a team of researchers including Davide Arnaudo, Vincenzo Cuciniello and Giorgio Gobbi, provides longer-run context. Over the period 2015–2025, private equity and venture capital investments in Italy more than doubled — a significant expansion that nonetheless leaves the Italian market less developed than the other major European economies.

The Banca d'Italia paper finds that Italian private equity investment is heavily oriented toward high-technology and knowledge-intensive sectors, with substantial participation from foreign funds. Companies that receive private equity backing tend to be larger, more profitable, and better capitalised than comparable firms in the same sector, size class, and geographic area — a profile consistent with the selectivity that characterises buyout and growth strategies.

The research covers the full spectrum of private equity strategies — from buyout, which targets controlling stakes in established businesses, to venture capital, which finances innovative companies at early and growth stages, to growth capital, which supports the scaling of already-structured enterprises. Each strategy serves a distinct segment of the corporate lifecycle, and Italian institutional demand spans all three.

Private credit: a parallel pillar of institutional demand

Alongside private equity strategies, private credit has emerged as a distinct and growing allocation for Italian institutional investors. The asset class — which encompasses direct lending, mezzanine financing, and other non-bank credit instruments — complements equity strategies by offering exposure to private markets with a different risk and return profile. AIFI's remit explicitly covers private debt alongside equity, reflecting the degree to which the two asset classes are now considered together by institutional allocators building diversified private markets portfolios.

Why it matters

Italy's private markets sector sits at an inflection point. Investment volumes have proved resilient, and the pipeline of deals — including those closed in July 2026 — points to a stronger second half. But the collapse in domestic fundraising is a structural warning: a market that relies on international operators for nearly three-quarters of its capital is exposed to shifts in foreign appetite that domestic managers cannot offset.

For Italian institutional investors — pension funds, insurance companies, foundations, and private banking clients — the sustained interest in buyout, venture capital, growth capital, and private credit reflects a broader shift in portfolio construction toward illiquid, return-seeking assets. The challenge is translating that interest into committed capital at a scale that can support a self-sustaining domestic ecosystem.

What to watch next

• Full-year 2026 investment data: AIFI will present second-half figures in early 2027; July's large deals, already flagged by Gervasoni, are expected to lift the annual total materially above the H1 run rate.
• Domestic fundraising recovery: Whether any Italian fund achieves a significant closing in H2 2026 will be a key indicator of whether the market can reverse the 60% H1 decline.
• Consolidation among domestic managers: AIFI has signalled that operator mergers are both necessary and possible; any announced combination would mark a structural shift in the market's architecture.
• Engagement with insurers and pension funds: AIFI's active outreach to the insurance and pension sectors — identified as the primary untapped sources of domestic capital — will determine the pace at which the fundraising base can be rebuilt.
• Banca d'Italia research follow-up: The October 2026 paper covers the 2015–2025 decade; updated data and policy implications are likely to inform regulatory and supervisory discussions in the coming months.