MILAN, Italy – Italy’s private equity market should receive a welcome boost when the government passes new closed-end fund legislation in January to create more efficient structures for international institutional investors. This year might also signal the beginning of a long-awaited spring for the country’s underdeveloped early-stage high-technology investment sector.
The first signs of a thaw came in 1998, which saw three new entrants to the high-tech market – Pino Ventures, headed by Elserino Piol, formerly of Olivetti Ventures; Fintech, promoted by Confindustria; and 3i Italia, which, although a long-established private equity provider in Italy, has for the first time opened its doors to technology investment opportunities as part of the group’s pan-European technology investment program.
Associazione Italiana degli Investitori Instituzionali nel Capitale di Rischio (AIFI), Italy’s national venture capital association, is working to accelerate the development of a vigorous domestic early-stage technology investment sector.
AIFI General Manager Anna Gervasoni said the association is trying to build a network of links between Italy’s traditional later-stage private equity providers and the country’s universities, in the hope of stimulating venture funding and research-based investment opportunities.
A 1998 change in the funding provisions for Italy’s universities has paved the way for a rapprochement between academia and the financial community, Dr. Gervasoni explained. With a reduction in the level of public funding to universities, funds raised by private sector sources have been left to fill the gap. As a result, Dr Gervasoni believes, Italian universities, which have previously conducted pure scientific research programs without taking into account the needs of industry, will be spurred to now consider the commercial and technological potential of research projects.
To finance the wave of spin-out opportunities that AIFI expects to materialize during the next three years, the association hopes to raise a dedicated pilot vehicle from a broad spectrum of Italy’s unquoted investors. AIFI, which currently is engaged in a series of road shows to gauge investor reactions to its ambitious plan, hopes to finalize the structure of the project during the first half of this year.
AIFI initially plans to launch a relatively small pilot fund with capital of between ecu 15 million and ecu 20 million ($17.71 million and $23.62 million), Dr. Gervasoni said. The association would like to ideally source modest capital commitments from a broad range of financing sources, thus maximizing the number of groups obtaining an initial exposure to early-stage high-technology investment while keeping the risk for individual participants at an acceptable level.
AIFI is currently engaged in another initiative that will prove to be a crucial factor in the long-term development of the country’s venture capital market. The association is working with Borsa Italiana Spa, Italy’s Stock Exchange, in an attempt to establish a market for growth companies that would be linked to EURO.NM. Although this project is still at a relatively early stage, the two groups have held a series of road shows for Italy’s entrepreneurs and currently are in discussions regarding initial public offering rules for small-cap stocks.