by Francesco Galietti
Historically, Italy has been a recipient of investments by SWFs long before SWFs became a topic for scholars and finance practitioners. For instance, Libyan state entities famously invested in FIAT and Juventus back in the 1970s.
Thus, investments by SWFs in Italy are no news per se. Instead, it is worth asking whether there has been a change in attitude within Italian institutions vis-à-vis these investors. In this respect, it should be noted that Italy is a country where the state has always played a very significant role in the economy.
Indeed, the set of dilemmas faced by Italian institutions is that of Western countries where the state is not only a legislator/regulator but also a player. Italian authorities, who still own controlling stakes in the most important listed blue-chip companies and even bigger interests in several closely regulated industries, seem quite reluctant to take action. Seducing foreign investors or blocking them – this seems to be the key issue.
From a legislative standpoint, back in 2008 an interagency committee on sovereign wealth funds was created to research, scrutinize and facilitate SWF investments in Italy. The committee, however, can hardly be compared with the US CFIUS and similar bodies entrusted with extensive powers of denial as it has little or no powers at all.
As the Italian political and economic landscape enters into a state of flux, the paper provides an analysis of the current situation in Italy, that foreign sovereign investors face while tackling the extraordinarily complex financial and institutional architecture of an European country. The author also comments on the evolving role of the newly established Fondo Strategico Italiano and its parent La Cassa Depositi e Prestiti.