Institutional investors play a key role in the development of equity markets in Italy while companies delist from the domestic stock exchange to find other funding channels, according to the Italian securities market regulator Consob.

In a recent report – Trends and challenges for the Italian financial sector – the regulator said that institutional investors can fund small and medium-sized enterprises (SMEs) in public markets through their “substantial resources and long-term investment horizons”.

Institutional investors tend to shy away from investing in the Italian equity market, holding around 11.2% of the capital of SMEs listed on the Euronext Milan (EXM), compared to 24.1% of non-SMEs, as of the end of October 2024, Consob’s report added.

The share of capital held by institutional investors in Italy is higher for SMEs with a market capitalisation bigger than €500m (16.6%) compared to smaller ones (9.8%), it added.

Some Italian schemes – such as Fondaereo, Fondo Gomma Plastica, Foncer, Fondo Pegaso and Previmoda – are considering investing in listed Italian SMEs, but fragmented capital markets create obstacles for pension funds investing in European equities.

Investments of European pension funds in euro zone equities stood at 8.6% of total equity investments in June last year, compared to 8% at the end of 2019, Consob stated.

Pension funds’ investments in equities and bonds issued within the euro zone remained persistently lower than investments in the same types of instruments issued outside the euro zone for the period 2019-2024, it added.

European markets are structurally smaller and less attractive than US markets for companies planning to list. Last year, 29 companies left the Italian equity market, 15 from EXM and 14 from Euronext Growth Milan (EGM) dedicated to SMEs.

In the same period, the number of companies newly listed or admitted to trading was 23, only two on the main EXM market and 21 on EGM.

Consob added in its report that it was necessary to simplify the regulatory framework to channel an increasing amount of funds towards public markets, making it easier for companies to access capital.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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