Almost everywhere, European private credit had a sluggish second and third quarter. Deal count flatlined, median deal size shrank by about a fifth, and LBOs slipped below 30% of activity, according to 9fin’s latest data review.
But that wasn’t true in Italy. The share of private credit-led transactions in southern Europe has grown to account for approximately 40%-50% of the market, versus bank-led transactions.
Italian healthcare has also seen a rise in private credit activity. The deals have been piling up. The headline act is CVC and GBL’s €10.7bn tender offer for Recordati, billed by its advisors as the largest leveraged buyout announced in Europe this year. Both banks and private credit funds circled its debt package of up to €8bn, according to 9fin reporting.
The private credit sector is growing, and funds are racing to cash in. Fortunately for Arcmont, its head of Italy, Vanni Mario Zanchi, knows the territory well. In 2025, Arcmont arranged a €470m financing for Italian diagnostics platform Bianalisi alongside Carlyle and Natixis.
9fin sat down with Zanchi to discuss the opportunities in private credit, how Italy’s family-owned businesses are warming to their new non-bank lenders, and what comes next on the shores of the Mediterranean.
1. 9fin data shows southern Europe on a high; what’s driving private credit’s momentum in Italy right now?
Historically, Italy has always been a market which has been underpenetrated for private credit. That’s for a number of reasons. Firstly, the banking market has always been very much dominated by a multitude of local banks, with very strong ties to entrepreneurs, who use them on a personal basis and therefore also use them for their companies. The second thing is the legal framework, which has historically not been very friendly, but has changed and evolved over time.
And then there’s the typical inclination of private credit funds to invest in sectors like software and business services, which are not the dominant sectors within the Italian economic landscape. That is more characterised by industrials, consumer-facing industries, healthcare, and other specific niches where Italian companies are among the best in the world.
When I started back in 2015, private credit was a last-resort option, but that’s changing now. 10 years ago, private credit penetration was probably roughly 1%-2%. Now we’re talking about roughly 50% as of 2025, which is a huge increase.
2. What structural factors are encouraging lenders to invest in Italian healthcare?
In Italy, there’s a clear trend towards a shift to private health, because public health is under stress. Expectations also changed post-Covid, and patients now want rapid and simplified access to specialists and treatments, which is often difficult to get in the public healthcare system. I think there’s also an overarching theme of an ageing population. If you look at the expectations of the World Health Organization, by 2050 roughly 30%-35% of people living in Italy will be over 65. These are significant tailwinds for the sector, which make it an attractive investment opportunity.
3. What does the Recordati take-private reveal about the role private credit can play in large, complex healthcare transactions?
I think what’s important is that private credit is a real alternative to public markets in periods of uncertainty. As happened in 2022, and as is being demonstrated now, when there’s volatility and you need certainty of execution in specific time frames, relying on private credit has a lot of value.
You need to deal with very large players, which have very large funds, as we do, and a handful of our peers can do the same. But I think it is an extremely interesting and viable option, also for very large private equity funds such as CVC, which closed a record-value transaction.
4. How does deploying capital in Italian healthcare credit differ from doing so in the rest of Europe?
I think it comes down to the structure of the market. The healthcare system in Italy has always been one of the best in the world, especially because it could guarantee coverage for basically every patient, with no insurance and no schemes of this kind.
Italian healthcare is managed at the regional level. You have a number of subsidies and a pretty complex system in terms of reimbursement, which each region deals with. So you need to know your space, which is pretty different from other countries in Europe.
I think that we are now at an inflection point. Post-Covid, a lot of doctors retired. There’s a gap which needs to be filled, and private healthcare is becoming a thing, which, apart from certain exceptions in specific regions, has never been the case over the last 10 to 20 years.
If you put all these factors together, that’s why I think it is a very compelling opportunity for private equity firms that focus on this sector and may want to consolidate specific niches.
5. How are lenders challenging bank dominance in the Italian market?
I think the underwriting appetite of banks has changed. Until a few years ago, you would see the large banks underwrite very large tickets in the Italian market, €200m-€250m, and then syndicate them to smaller institutions. This is less the case right now. Even for €100m, you have three, four, five, six institutions that each underwrite a €15m-€20m ticket.
The benefits of private credit are clear: speed of execution and certainty. What we can offer are structures which are potentially more aggressive and more flexible, which banks, because of capital requirements, would find more difficult to contemplate.
Also crucial is the ability to play at scale. We typically underwrite tickets from €70m-€80m to potentially €500m. We solve an issue which is often pretty critical, because you need financing to complete transactions. If you can find a counterparty which is reliable and can deliver on time for large tickets, it really differentiates your offering.
I would argue that Arcmont has been a pioneer in Italy. Though ‘pioneer’ is an often-abused expression, I think it fits us. We were one of the early movers, one of the first players to be established. I think that has helped us create a reputation as a reliable counterparty, and very strong relationships with our private equity partners.
6. How are Italy’s family-owned pharma businesses responding to the idea of non-bank lenders?
When I started, you really needed to convince entrepreneurs that private credit was the right call. First of all, you had to convince them to talk to you at all; then, second, you had to justify why they had to pay a higher price compared to what banks would offer them. That’s changed as they’ve seen what partnering with us can offer.
Even now, entrepreneurs are sometimes too focused on the headline pricing, which is just one component of the overall package. You need to look at the full package, because otherwise you end up in slice-by-slice negotiations, which are tedious and rarely productive. If you go with us over a bank, you get a lot of flexibility, the opportunity to re-lever in certain cases, a committed acquisition facility, and a lot of freedom to go buy stuff and consolidate, potentially benefitting from multiple arbitrage.
If you are extremely averse to leverage, very much focused on pricing, and you want to close a deal at, for example, 400bps over at 3x leverage, private credit is probably not the right option. But for everything else, and even potentially for more complex structures, such as preferred instruments, HoldCo financings or a combination of senior plus unitranche or senior plus preferred, the flexibility provided to entrepreneurs is, I think, of extreme value.
The headline terms are still a bit itchy for entrepreneurs. But I think they have become acquainted with the structure and with the benefits that private credit can offer vis-à-vis traditional banks.
7. Beyond headline deals like Recordati, where are the most compelling opportunities in Italian healthcare and life sciences?
There are contract development and manufacturing organisations which we’ve been tracking for quite some time, and contract manufacturing organisations, which we’re also looking at. Both are in ample supply in the Italian healthcare space, which we think is very exciting.
Medtech and in vitro diagnostic manufacturing are also interesting. Italy is the fourth-largest medical device market in Europe, with genuine manufacturing strength in diagnostic imaging, contrast media, orthopaedics and prosthetics, dialysis equipment, and dental products. The base is highly fragmented with ample small and micro manufacturers, which is fertile ground for a medtech-CDMO or component buy-and-build.
In terms of healthcare companies, there are European and global champions based in Italy, which are very attractive from a private equity perspective. But apart from these large players, like Bianalisi, which is a deal we supported, there’s a myriad of smaller players. For them, integration and multiple arbitrage via M&A are extremely appealing.
You have to look at the sector holistically. We are sponsor-led in the vast majority of our transactions, so it very much depends on what’s currently available in the market, and then within the specific niches we decide whether we like a specific thing or not. But the overall theme of healthcare, pharma, and life sciences is something which we are definitely focused on as a whole.
8. What does the future hold for direct lending in Italy?
The short answer: it’s here to stay. Penetration is probably slower than in other countries, but it will not stop. I am very optimistic about the future.
We’ll probably not get to the over 80% for 2025 that you saw in the Benelux region, but private credit is now definitely the main option, unless you want to do a deal at 2.5x-3x leverage. Then, of course, the banks are definitely a better option. But for more structured deals, with larger tickets, private credit solutions are definitely the preferred route and that will only continue to grow.
9. You’ve spent a long time in Italy, how’s it changed since Arcmont arrived?
It’s staggering what’s happening in Italy right now, especially in Milan. I moved to the city when I was 19 to study at university, in 2004, I think, and now the city is a completely different planet. It has attracted a lot of international professionals. What’s fascinating, I think, is not only the ability to attract investments, but also the ability to attract professionals. We’ve seen an increase in openings from our competitors, from private equity firms, from services, which makes it probably more similar to London than any other city in Italy right now.
There was a huge Vogue World fashion show recently and the city was completely full. It has become very glamorous, probably more than it has ever been. People used to come to Milan for shopping. Now they come to Milan because it’s actually cool.
Obviously this has also had adverse effects, in the sense that it has become a way more expensive city, and probably less affordable for many people. A recent highlight for me was the Monza Grand Prix a couple of weeks ago, which I was lucky enough to attend. It was extremely fun and entertaining, with Antonelli winning the race at the end. That was the cherry on top.
