Italian state lender CDP is to set up a private equity fund to invest in family-run companies and help them go public, in a new effort to help domestic groups compete in the global market.
The Cassa Depositi e Prestiti (CDP), which has a war chest of around 400 billion euros ($440 billion), has recently undergone a management shake-up driven by Italian Prime Minister Matteo Renzi.
With former Goldman Sachs banker Claudio Costamagna at its helm, the 165-year old institution is due to unveil a new business plan next week under which the CDP will have a more hands-on approach to investing in domestic companies to help boost economic growth.
With the help of the new fund, “the number of companies listed on Milan’s stock exchange could double”, Costamagna said.
CDP funds come from post office savings accounts and bonds it issues. Its debts are not consolidated into Italy’s overall public debt, allowing the government to use it as its investment arm without further stretching its finances.
The private equity fund, which will be one of the pillars of the new business plan, will be put under the wing of the Italian strategic fund (FSI), which already acts as the CDP’s investment arm.
The new fund, which Costamagna recently described as a “growth equity” vehicle, will buy a minority stake in promising companies that lack scale or to help with the management of companies where there are problems of succession.
CDP will act as an anchor investor and invite foreign investors, including sovereign wealth funds, to become shareholders in those groups.
“I see between 10 and 20 Italian groups able join the fund next year,” said Guido Corbetta, a professor at Bocconi University responsible for research on family-owned companies.
According to a study compiled by Bocconi, Italian firms in the hands of families account for 65 percent of the 15,722 domestic companies, with turnover of more than 20 million euros.
Since the beginning of this year foreign rivals have taken over several family-controlled Italian groups including big companies such as cement maker Italcementi and smaller firms such as fireplace maker Emmeti.