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Italy to create $1.1bn fund for local strategic firms

Crowd, Person, People REUTERS/Guglielmo Mangiapane
Prime Minister Giorgia Meloni is courting SWFs of Saudi Arabia, Qatar, the UAE, Azerbaijan and Norway to give the fund more firepower

Italy’s cabinet on Wednesday approved a bill to create a fund to support domestic firms, the industry minister said in a statement, in a move aimed at shoring up strategic supply chains.

The upcoming national strategic fund for “Made in Italy” products will have an initial endowment of €1 billion ($1.10 billion) in state cash, the statement said, adding it would also aim to boost procurement of “critical raw materials.”

A draft seen by Reuters showed that the new vehicle was also entitled to invest in domestic, listed firms not operating in the financial sector.

The scheme will aim to raise at least an additional €500 million from private investors, according to the document.

Government sources have previously told Reuters that the administration led by nationalist Prime Minister Giorgia Meloni is courting sovereign wealth funds (SWFs) of Saudi Arabia, Qatar, the United Arab Emirates, Azerbaijan and Norway to give the fund more firepower.

Industry minister Adolfo Urso’s project is part of a broader proposal from the right-wing administration aimed at supporting Italian business, focusing on the country’s traditional products and industries like pasta, pottery and woodwork.

According to the draft, Prime Minister Giorgia Meloni plans to finance the 1-billion euro endowment through part of the resources originally earmarked for “Patrimonio Rilancio,” a fund launched in 2021 to bolster companies hit by the pandemic.

Run by the state lender Cassa Depositi e Prestiti (CDP), the Patrimonio Rilancio fund was originally intended to provide some €40 billion of financing, but has so far invested just around €1 billion.

Once the bill is approved by parliament, the government will issue a decree defining how the fund will work.

Italy’s plan takes its cue from an initiative announced this month in France, where private equity firm InfraVia Capital Partners will launch a €2 billion fund dedicated to critical materials projects, a quarter of which will be funded by Paris.

Rome’s announcement of the project this month triggered skeptical reactions from analysts and economists, who argued among other things that the fund risked duplicating CDP Equity, a CDP unit formed in 2011 and tasked with injecting capital into strategic assets.