The fundraising memo made no mention of artificial intelligence. For Nextalia, the Milan-based private equity firm, that was the point.
The firm said this month that its second flagship buyout fund, Nextalia Private Equity II, had completed its first close at 1.1 billion euros, roughly 8.6 billion yuan. The fund began raising in February, carries a hard cap of 1.5 billion euros, and the firm plans to hold its final close by the end of 2026.
Nextalia’s positioning is deliberately unfashionable. Where much of the global buyout industry has spent the past two years bidding up stakes in AI infrastructure, chip designers and cloud software, Nextalia has steered its second fund toward the unglamorous middle of the European economy: Italian and, in time, pan-European mid-market companies in manufacturing, distribution, healthcare services and business services, sectors where valuations remain tied to earnings rather than to narrative.
The size puts the fund at the upper end of this year’s European mid-market first closes, according to people familiar with fundraising data. The firm, launched in 2022, built its first fund around Italian buyouts and point to those deals as the template for the second vehicle. The strategy, according to people familiar with the firm’s pitch to investors, is to buy companies the larger global funds overlook: family-owned industrial groups with stable cash flow, export businesses with strong niches, and service firms that have never had a private equity owner.
The decision to skip the AI frenzy is deliberate. Managers told prospective investors that frothy valuations in AI-related assets left little margin for error, and that the second fund would rather pay a fair price for a company with stable cash flow than a rich price for a story. One person who sat through the fundraising presentations described the pitch as anti-hype by design: no slide decks about the technology curve, no comparisons to Silicon Valley multiples, only earnings, margins and the pipeline of Italian companies waiting for an owner with capital and patience.
The strategy carries its own risks. Mid-market European companies are more exposed to the region’s weak growth and to interest-rate moves than the technology giants that have carried global markets. Currency swings between the euro and the dollar affect returns for the fund’s American investors, who make up a meaningful share of its limited partners. And the firm’s discipline depends on its thesis holding: if AI-linked assets keep climbing, Nextalia will have to explain why its investors should settle for industrial earnings growth while rivals bank exits in the hundreds of millions.
Investors signed up anyway. The first close drew commitments from institutional investors in Europe and the United States, according to people familiar with the matter, including pension funds and insurers that have stuck with the firm since its first fund. The final close at the end of 2026 will test whether the thesis holds beyond its founding believers.
The firm says it will deploy the fund the same way it deployed the first: majority stakes in mid-market companies, active boards, and a focus on operational improvements rather than financial engineering. Italy’s industrial economy, with its dense fabric of family firms, remains a deep market for that approach, and Nextalia argues the country is undersold to international investors who see only politics and debt.
The firm’s patience has a commercial logic that its managers lay out plainly. Italian mid-market companies are, on average, cheaper than their German or French counterparts on the same earnings, a discount the firm attributes to foreign investors’ wariness of the country’s politics and its slow growth. The discount is the fund’s margin of safety, and it does not require the technology cycle to keep cooperating.
The deal pipeline, according to people familiar with the firm, is built through relationships rather than auctions: owners who want a buyer with no industrial synergies to protect, and who value a fund that will hold for years rather than flip quickly. The firm argues that in a market where the global houses chase the same few trophy assets, the mid-market remains deep enough to absorb a fund of this size without distorting prices.
The team’s own background matters to investors, several of whom cited the founders’ operating experience at Italian industrial companies as the reason they committed. The firm runs a compact structure, fewer than two dozen investment professionals, a headcount that large global funds would consider thin for a billion-euro vehicle. The managers say that is the point: the fund is built for deals small enough that a small team can understand them completely.
For now, the firm is betting that discipline outlasts fashion. The first close was announced without fanfare, in a statement shorter than most product launches. The message was that the fund was raised on the strength of existing relationships and a known market, not on exposure to the technologies of the moment. In a fundraising year dominated by AI’s gravity, that restraint has become a positioning statement of its own: Nextalia raised more than a billion euros by promising to ignore what everyone else is chasing.
