Italian pension funds looking to increase their private markets investments face the competition of international players, backed by pension funds, targeting strategic assets on the market.

Rules currently in place don’t allow pension funds to invest strategically, and directly to take over assets in the hands of the government, said Patrizia Noé, head of institutional client coverage Italy at UBS Asset Management, speaking at a recent event organised by asset management association Assogestioni.

Giorgia Meloni’s government plans to cash in €20bn by privatising assets.

“Do we review the rules? Or we table a [new] strategic approach, that can only be defined by the pension funds, to make funds available in an important game for the country?” Noé said.

Political stability and firm rules are other important factors driving investments, especially in strategic sectors identified by Italy’s recovery and resilience plan, which is backed by the European Commission, she added.

Asset and fund management companies in Italy compete with international players to invest in strategic assets, such as Telecom Italia’s fixed-line network bound to be sold to KKR – a deal approved by the government deeming it strategic.

“Where does KKR take money from? From US pension funds,” said Ugo Loeser, chief executive officer of asset management company Arca Fondi.

For Loeser there is a lack of investors in Italy and in Europe with a long-term horizon and high appetite for risk.

“If we want to channel funds from savings in Italy and in Europe towards the real economy, a change in terms of the institutional structure would be necessary,” he said, adding that this could only be achieved by transitioning from a focus on the third pillar pension system to a focus on the second pillar.


Current rules and lack of political support can hinder pension funds’ plans to increase private markets commitments

Pension funds are committed to supporting the Italian economy, alone, or by joining forces in public-private partnerships to overcome fragmentation, and achieve a larger size for investments.

Fon.Te, the pension fund for workers in the commerce, tourism and services, has approved commitments for over €350m in private equity, private debt, and infrastructure, for the next in a year and half.

“We plan in 2024 to continue selecting [investments] in venture capital and real assets,” general director Anna Maria Selvaggio said at the event.

Previambiente has invested €15m in a private equity fund of funds (FoF) managed by Fondo Italian D’investimento, and will invest a further €15m in a infrastructure FoF, general director Salvatore Cardillo added.

“We started late” investing in private markets, he said, noting that ”we had to understand” and create a structure for new types of investments. The fund called on the Italian government to help design a product tailored for institutional investors investing in the real economy.

Inarcasssa invests €1.5bn in private equity, debt and venture capital.

“Today, Inarcassa has €125m committed to venture capital. That means that we are one of the most relevant institutional investors in the sector,” general manager Alfredo Granata said.

He added: “One important aspect for us is that currently vehicles for private market investments care about sustainability, technological innovation, and gender equality. For us these topics are very important, making those types of investment appealing.”

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