MILAN — At a time of transformation throughout business, the Italian government has taken a major stake in a new Milan-based sovereign fund being launched to support Italian companies, including in fashion.
FSI SGR, or Fondo Strategico Italiano (Italian Strategic Fund), is setting up a new fund called FSI Mid‐Market Growth Equity Fund with the goal to support leading Made in Italy companies that share growth potential and the need to expand in international markets. Fashion is understood to be a major area of interest for the new fund.
Former Salvatore Ferragamo chief executive officer Michele Norsa has joined the fund as industrial partner and will provide his expertise in the areas of design, fashion, food and hospitality, he explained.
The initial funding totals more than one billion euros, with a target to reach 2 billion euros. The government-backed Cassa Depositi e Prestiti, or CDP, a joint-stock company under public control, is the fund’s anchor investor and has a 25 percent stake in the fund. Other subscribers include sovereign funds from the Middle East — including, it is understood, Kuwait, for example; the Far East, including Singapore and Malaysia, and Central Asia, as well as from Russia, insurance companies, European banks, foundations and asset managers. Italian and international pension funds and holding companies of industrial groups are expected to join in the next rounds of funding.
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This is “one the main European investment tools focused on one country, with a strong vocation to attract international capitals,” FSI said on Wednesday. In the first closing, foreign investors represent 60 percent of the total.
The fund is expected to partner with entrepreneurs and managers as well as the families leading the companies, facilitating the process of succession and supporting them during the steps leading to an initial public offering, taking minority stakes and with limited financial leverage.
“I feel I can be useful to the country. My history is about growing family companies,” said Norsa, who stepped down from Ferragamo last year, and was succeeded by Eraldo Poletto, after a 1o-year tenure. Norsa spearheaded the company’s IPO in 2011 and helped to grow the firm globally. He was the first nonfamily member to fill the ceo position, under the chairmanship of Ferruccio Ferragamo.
His earlier experience with the IPO process was one of the reasons he was brought into Ferragamo as he played a critical role in Marzotto SpA’s stock market spin-off of its fashion interests into Valentino Fashion Group. Norsa became ceo of Valentino SpA in 2002 , when Marzotto bought the fashion house from the now-defunct holding company HdP. He was also general manager of VFG’s licensed brands M Missoni and Marlboro Classics. Earlier, the executive worked at other family-owned companies such as Benetton, Sergio Tacchini and Rizzoli. Last year, Norsa was appointed nonexecutive director of the board of Rocco Forte Hotels, which comprises 10 hotels and resorts across Europe, and is one of FSI’s investments.
“The generational change is a current issue now, with many companies seeing the second or third generation taking the lead, often within a fragmented shareholding. Having a professional partner can solve these matters,” observed Norsa.
“I share the fund’s long-term view and attitude of patient investor,” said Norsa, commending the fact that the fund does not seek a majority stake in the targeted firm. The investments are expected to span over more than five years. “They don’t want to take over a company but to accompany it. This is a great opportunity, there are so many excellent brands in Italy.”
He emphasized the importance of the production districts in the country and some sectors such as cosmetics and fragrances.
The fund will not invest in troubled companies, in real estate, greenfield infrastructures, banks or insurance firms.
The team comprises 23 professionals and is led by Maurizio Tamagnini, who already holds the role of ceo of FSI, flanked by Barnaba Ravanne, chief investment officer, and Marco Tugnolo, investment director. Claudio Costamagna, president of Cassa Depositi e Prestiti, is president of the board.
Tamagnini characterized FSI as a “bridge between long-term investors, including sovereign funds, and Italy’s experienced companies, fueling their growth together with the entrepreneurs.” Norsa said that Tamagini’s involvement was relevant in his choice of joining the fund, expressing his respect for the businessman. “I’ve worked with him before and I enjoy it.”
Asked about the lack of luxury conglomerates in Italy comparable to LVMH Moët Hennessy Louis Vuitton and Kering, which have over the years bought several Italian brands, from Gucci to Bulgari, Norsa conceded the fund is also “a way to protect the pipeline and its traditions. It’s an important support to give confidence to a new generation facing obstacles.”
In 2012, the FSI created a joint venture, IQ Made in Italy, with Qatar Holding LLC, a global investment firm founded by the Qatar Investment Authority in 2006, looking to invest in Italian brands. That venture had total capital of 2 billion euros, or $2.27 billion, provided equally by Qatar Holding LLC and the FSI over the following four years.
Observers at the time said that the issue of attracting foreign capital in Italy had always been a problem and such an initiative was more than welcome. Then and now, the moment of transition for the Italian fashion industry presents significant growth challenges, generational shifts, and high labor costs. Tackling these challenges on a daily basis, entrepreneurs and executives are mulling different options, which range from a public listing to partnering with cash-rich partners or selling off.