Italian industry-wide pension funds are turning to small and mid-cap growth investing to diversify portfolios across listed and unlisted assets and generate returns.
Fondo Gomma Plastica, Foncer, Pegaso and Previmoda have appointed Anima to manage €82m in Italian SMEs listed on the domestic stock exchange, the funds announced today.
“The decision to focus on the Italian stock market stems from the belief that Italian SMEs offer significant potential for [creating] value,” the funds said in a statement.
They noted that SMEs are under-represented in global benchmarks, meaning they do not benefit from the segment’s value-creation potential. Italy has a weighting of just 0.8% in the MSCI World equity index, which only includes large-cap Italian companies.
SMEs are listed on Euronext Growth Milan, an index aimed at dynamic and competitive firms, and Euronext Milan, for mid- and large-caps aligned with international standards and open to global investors, according to Borsa Italiana.
The Euronext STAR Milan segment focuses on high-quality SMEs. In total, the Italian exchange lists 408 companies, of which 321 are SMEs, with a market cap of €949bn, dominated by the financial sector, Borsa Italiana said.
“The choice to invest in this market segment is motivated by the good performance recorded in the medium term and by the presence of interesting companies, but undervalued in a market historically undersized compared to that of the main European peers,” the funds added.
Strategically, the four funds aim to broaden return sources and benefit from the tax breaks available for investors in ‘Piani individuali di risparmio’ (PIR), a type of vehicle intended for bboth institutional and retail investors, and aimed for medium- to long-term investments. The funds also aim to engage with listed SMEs to encourage them to achieve ESG goals, particularly on social issues such as job security, welfare and healthcare.
This latest allocation increases the funds’ exposure to Italian equities, while supporting the domestic economy.
The funds already back Italian companies through private equity allocations under ‘Progetto Iride’ (Project Iris).
Fondo Pegaso, Fondo Gomma Plastica and Previmoda, together with Fopen – the Enel employees’ fund – have also committed €200m to the second round of private debt investments under ‘Progetto Zefiro’ (Project Zephyr).
They also cooperate on ‘Progetto Vesta’ to invest in infrastructure.
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