Italy has started a process to launch the Fondo Nazionale Strategico – the national strategic fund – to invest up to €1bn in small caps listed on the domestic stock exchange.

The Fondo Nazionale Strategico Indiretto (FNSI), a closed-ended fund of funds (FoFs) managed by Cassa Depositi e Prestiti (CDP), the partly state-owned Italian investment bank, could mobilise at least €700m, Francesco Mele, chief executive officer of CDP Equity, part of CDP group specialised in strategic investments, told local newspaper Il Sole 24 Ore.

CDP plans to invest in around 10 funds, for a total amount of €350m, half of CDP’s portion, he added. The FoFs could raise up to €1bn and the plan is for CDP to commit €500m if the total amount raised reaches that target, IPE understands.

The FoFs will invest in newly-established Undertakings for Collective Investment in Transferable Securities (UCITS), under Italian law and managed by asset managers that can collect capital from institutional investors and qualified retail investors, the paper added.

FNSI will underwrite a maximum of 49% of newly established UCITS under Italian law.

The UCITS will, in turn, invest 70% of the capital in small and medium-sized enterprises (SMEs) listed on the Italian stock exchange, and 30% in Italian equities and government bonds, or bonds issued by euro-zone members, according to news agency ANSA.

The UCITS must be liquidated by the end of 2032 and will be allowed to distribute dividends on an annual basis. The government plans to draft the regulation to implement the FoFs shortly, close the project by the end of the year and invest towards the end of the first quarter of 2025, ANSA added.

Investments will target companies wanting to go public through an IPO on the Euronext Growth Milan (EGM) exchange, created in 2009 for SMEs that are dynamic and competitive, offering a simplified path to listing, compared to the Euronext Milan market, with minimum access requirements and obligations tailored to SMEs, according to the Italian Stock Exchange Borsa Italiana.

FSNI can also take over the role of anchor investor in IPOs, according to Il Sole 24 Ore.

Meeting expectations

Earlier this week, the undersecretary of state of Italy’s Ministry of Economy and Finance (MEF) introduced the FoFs to investors including to first pillar Casse di Previdenza (pension funds), Intesa Sanpaolo, Unicredit, Credit Agricole banks, and Generali.

Italian pension funds have lamented for a while the double tax levy of 26% on financial returns, and on pension payouts, while underlying that they already allocate their assets in private markets to support the Italian economy.

Enpam, Italy’s largest first pillar scheme with more than €26bn in total assets, invests €6.5bn in real assets, of which 90% is in Italy, with €4bn invested in Italian corporate and government bonds, and €1bn in Italian private markets, said president Alberto Oliveti in an interview.

The Italian government also planned to launch the sovereign wealth fund ‘Fondo Strategico Nazionale del Made in Italy’ (National Strategic Fund for the Made in Italy) to support growth of national strategic supply chains, and the procurement of critical raw materials, but the project seems to have lost traction for now.

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