Click here to download

State-owned private equity funds investing in "national champions": The case of Italy
Journal Title: ECONOMIA PUBBLICA  
Author/s: Francesco Baldi, Davide Ciferri 
Year:  2016 Issue: Language: English 
Pages:  42 Pg. 177-218 FullText PDF:  507 KB
DOI:  10.3280/EP2016-003007
(DOI is like a bar code for intellectual property: to have more infomation:  clicca qui   and here 


Despite the recent upsurge of scientific work on the Sovereign Wealth Funds’ (SWFs) phenomenon, little is known on the role played in a country’s economy by a subcategory of SWFs: Strategic Funds ("SFs"). As an explicit form of governmental intervention in the economic system associated with a new model of State capitalism, SFs acquire strategic (equity) stakes in enterprises of national interest with the purpose of enhancing the home country’s growth and competitiveness. The aim of this article is to investigate the rationale, public policy objectives and investment strategies pursued by SFs, thus contributing to the SWF literature in three ways. First, we provide a definition of State-Owned Private Equity (SOPE) as referred to the activity of SFs and develop a conceptual framework to strategically position them within the PE industry. Second, we conduct a peer analysis of SFs operated by European national governments on the basis of which we propose a taxonomy of such PE entities classified into competitive and defensive ones. Third, we discuss how a SF can contribute to enhancing the competitiveness of the home country through amelioration of its macroeconomic fundamentals (e.g., value added, employment) associated with the adequate management of portfolio companies. To do so, we illustrate the case study of the SF operated by the Italian government, named as Fondo Strategico Italiano (FSI).
Keywords: Sovereign wealth funds, state-owned private equity, strategic funds, value added.
Jel Code: G23, L32, L53

  1. Aghion P., Boulanger J. and Cohen E. (2011). Rethinking Industrial Policy. Brugel Policy Brief, 4, June.
  2. Aguilera R.V., Capapé J. and Santiso J. (2016). Sovereign Wealth Funds: A strategic governance view. Academy of Management Perspectives, 30(1): 5-23.
  3. Aiginger K. (2014). A Systemic Industrial Policy to Pave a New Growth Path for Europe. WIFO Working Paper.
  4. Alvaro S. and Ciccaglioni P. (2012). I Fondi Sovrani e la regolazione degli investimenti nei settori strategici. CONSOB – Discussion Papers, 3, July.
  5. Backer L.C. (2009). Sovereign investing in times of crisis: global regulation of sovereign wealth funds, state owned enterprises and the Chinese experience. Journal of Transnational Law and Contemporary Problems, 19(1).
  6. Bain & Company (2015). Global Private Equity Report 2015. February.
  7. Baker G.P. and Montgomery C.A. (1994). Conglomerates and LBO Associations: A comparison of organizational forms. Harvard Business School Working Paper 10-024.
  8. Baldi F. (2012). Private Equity Targets. Strategies for Growth, Market Barriers and Policy Implications. Springer.
  9. Barber F. and Goold M. (2007). The strategic secret of private equity. Harvard Business Review, 85(9): 53-61.
  10. Bassanini F. (2012). La Cassa Depositi e Prestiti nell’economia sociale di mercato. CDP.
  11. Bassanini F. (2015). La politica industriale dopo la crisi: il ruolo della Cassa Depositi e Prestiti. L’Industria, 3.
  12. Bassanini F. and Reviglio E. (2015). Financing Infrastructure in Europe. The Junker Plan and the Role of the National Promotional Banks. In Investing in Long-Term Europe. Re-launching fixed, network and social infrastructure. Luiss University Press.
  13. Bernstein S., Lerner J. and Schoar A. (2013). The investment strategies of sovereign wealth funds. Journal of Economic Perspectives, 27(2): 219-238.
  14. Bortolotti B., Fotak V. and Megginson W.L. (2010). Quiet leviathans: sovereign wealth fund investment, passivity, and the value of the firm. Working Paper, University of Oklahoma and Sovereign Investment Lab.
  15. Bortolotti B., Fotak V., Megginson W.L. and Miracky W. (2010). The financial impact of sovereign wealth fund investments in listed companies. Working Paper, University of Oklahoma.
  16. Bortolotti B., Fotak V. and Megginson W.L. (2014). The rise of sovereign wealth funds: definition, organization, and governance. Baffi Center Research Paper, 163 (December).
  17. Bortolotti B., Fotak V. and Megginson W.L. (2015). The sovereign wealth fund discount: Evidence from public equity investments. The Review of Financial Studies, 28(11): 2993-3035.
  18. Brauer M.F. (2013). The effects of short-term and long-term oriented managerial behavior on medium-term financial performance: longitudinal evidence from Europe. Journal of Business Economics and Management, 14(2): 386-402.
  19. Cassa Depositi e Prestiti (CDP) (2013). Capitale per lo Sviluppo. Strumenti finanziari europei a sostegno delle imprese e degli investimenti. Report Monografico, 2.
  20. Cassa Depositi e Prestiti (CDP) (2015). Relazione finanziaria annuale 2014.
  21. Castelli M. and Tagliapietra S. (2012). How big could SWFs be by 2016? In Castelli M., Scacciavillani F. The new economics of Sovereign Wealth Funds. New York: John Wiley & Sons.
  22. Chhaochharia V. and Laeven L. (2009). Sovereign wealth funds: their investment strategies and performance. Working Paper. University of Miami and International Monetary Fund.
  23. Ciarlone A. and Miceli V. (2013). Le strategie di portafoglio dei fondi di ricchezza sovrani e la crisi globale. Questioni di Economia e Finanza (Occasional Papers) – Banca d’Italia, n. 156, aprile.
  24. Ciferri D., Antellini Russo F. and Palazzo A. (2015). Crescere per competere. Il caso del Fondo Strategico Italiano. Quaderni CDP, 1, marzo.
  25. Clark G. and Monk A. (2009). The Oxford survey of sovereign wealth funds’ asset managers. Working Paper, University of Oxford.
  26. Dallas L. (2012). Short-termism, the financial crisis, and corporate governance. Journal of Corporation Law, 37.
  27. Dewenter K.L., Han X. and Malatesta P.H. (2010). Firm values and sovereign wealth fund investments. Journal of Financial Economics. 98: 256-278.
  28. Ernst & Young (2009). InterChange. 23, March.
  29. European Economic and Social Committee (EESC) (2009). Data collection study on the impact of private equity, hedge and sovereign funds on industrial change in Europe. Final Report, June.
  30. European Commission (2013). Green paper on long-term financing of the European economy. COM (2013) n.150, March.
  31. European Commission (2014). Communication on long-term financing of the European economy. COM (2014) n.168, March.
  32. Farrell D. and Lund S. (2008). The world’s new financial power brokers. McKinsey Quarterly, 1.
  33. Fernandes N. (2014). The impact of sovereign wealth funds on corporate value and performance. Journal of Applied Corporate Finance, 26 (1): 76-84.
  34. Fondo Strategico Italiano (FSI) (2015a). Chi siamo.
  35. Fondo Strategico Italiano (FSI) (2015b). Come operiamo.
  36. Geron D. and Greco L. (2012). Supporto pubblico al capitale di rischio: lezioni dalla crisi. Economia e Società Regionale, 3.
  37. Graham J.R., Harvey C.R. and Rajgopal S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3): 3-73.
  38. Harper N.W.C. and Schneider A. (2004). Private equity’s new challenge. McKinsey Quarterly, August.
  39. Hoskisson R.E., Shi W., Yi X. and Jin J. (2013). The evolution and strategic positioning of private equity firms. Academy of Management Perspectives, 27(1): 22-38.
  40. International Monetary Fund (2008a). Sovereign Wealth Funds – A Work Agenda. February.
  41. International Monetary Fund (2008b). Sovereign Wealth Funds: Generally Accepted Principles and Practices – “Santiago Principles”. International Working Group of Sovereign Wealth Funds (IWG), March.
  42. Jensen M.C. (1989). Eclipse of the public corporation. Harvard Business Review, 67(5): 61-74.
  43. Jensen M.C. (2010). Active investors, LBOs, and the privatization of bankruptcy. Journal of Applied Corporate Finance, 22(1): 77-85.
  44. Kaplan S. and Stromberg P. (2009). Leveraged buyouts and private equity. Journal of Economic Perspectives, 23(1): 121-146.
  45. Karolyi G.A. and Liao R.C. (2016). State capitalism’s global reach: Evidence from foreign acquisitions by state-owned companies. Journal of Corporate Finance. Forthcoming.
  46. Knill A.M., Lee B.S. and Mauck N. (2012a). Bilateral political relations and sovereign wealth fund investment. Journal of Corporate Finance, 18: 108-123.
  47. Knill A.M., Lee B.S. and Mauck N. (2012b). Sovereign wealth fund investment and return-to-risk performance of target firms. Journal of Financial Intermediation, 21: 315-340.
  48. Knill A., Lee B. and Mauck (2013). Determinants of sovereign wealth fund investment in private equity versus public equity. Journal of International Business Studies, 44: 155-172.
  49. Kotter J. and Lel U. (2011). Friends or foes? Target selection decisions of sovereign wealth funds and their consequences. Journal of Financial Economics, 101: 360-381.
  50. Lucchese M., Nascia L. and Pianta M. (2016). Industrial policy and technology in Italy. ISIG Working Paper, n. 2, January.
  51. Lyons G. (2007). State Capitalism: The rise of sovereign wealth funds. Journal of Management Research, 7 (3).
  52. Mazzucato M. and Penna C. (2015). Beyond market failures. The market creating and shaping roles of state investment banks. Levy Economics Institute of Bard College, Working paper, n. 831.
  53. McCarthy J. and Alvarez N. (2006). Private equity: Rolling on or rolling back. Journal of Private Equity, 9(2): 13-16.
  54. Megginson W.L. and Fotak V. (2015). Rise of the fiduciary state: A survey of sovereign wealth fund research. Journal of Economic Surveys, 29(4): 733-778.
  55. Miceli V., Wohrmann A., Wallace M. and Steiner D. (2015). Opportunities or threats? The current and future role of sovereign wealth funds in financial markets. Deutsche Asset & Wealth Management, n. 14, March.
  56. Musacchio A. and Lazzarini S. (2014). Reinventing state capitalism: Leviathan in business, Brazil and beyond. Harvard University Press: Cambridge (MA).
  57. Ninni A. (2013). La Cassa Depositi e Prestiti: il ritorno dello Stato-guida (e oltre) in politica industriale. Economia e Politica Industriale – Journal of Industrial and Business Economics, 15: 141-155.
  58. Olesiński B., Opala P., Rozkrut M. and Torój A. (2014). Short-termism in business: causes, mechanisms and consequences. Ernst & Young Poland Report.
  59. Pianta M. (2014). An industrial policy for Europe. Seoul Journal of Economics, 27(3): 277-305.
  60. Porter M.E. (1990). The competitive advantage of nations. Harvard Business Review, March-April.
  61. Porter M.E. (1992). Capital choices: Changing the way America invests in industry. Harvard Business School Press: Boston.
  62. Quadrio Curzio A. and Miceli V. (2010). Sovereign Wealth Funds. A Complete Guide to State-Owned Investment Funds. Harriman House, UK.
  63. Rozanov A. (2005). Who holds the wealth of nations? Central Banking Journal, XV, 4: 52-57.
  64. Rozanov A. (2007). Sovereign Wealth Funds: Defining Liabilities, Working Paper, State Street Global Advisors.
  65. Sovereign Wealth Fund Institute (2016). Sovereign Wealth Quarterly, July.
  66. Wright M., Hoskisson R.E. and Busenitz L.W. (2001). Firm rebirth: Buyouts as facilitators of strategic growth and entrepreneurship. Academy of Management Executive, 15(1): 111-125.
  67. Wright M. (2013). Private equity: managerial and policy implications. Academy of Management Perspectives, 27(1): 1-6.
  68. Yong K.P. (2012). Private Equity in China: Challenges and Opportunities. Wiley, Singapore.

Francesco Baldi, Davide Ciferri, in "ECONOMIA PUBBLICA " 3/2016, pp. 177-218, DOI:10.3280/EP2016-003007

   

FrancoAngeli is a member of Publishers International Linking Association a not for profit orgasnization wich runs the CrossRef service, enabing links to and from online scholarly content