ESG, social responsibility, sustainability are objectives represented in every sector of the economy and increasingly present in finance as well. Fondo Italiano d'Investimento SGR (asset management company), in which CDP Equity and leading Italian institutions have a stake, is leading the way in a particular field, that of so-called ‘funds of funds’, the indirect investments, i.e. investments in vehicles managed by other operators and private equity entities. Some numbers, extracted from Fondo Italiano's latest sustainability report, explain the socio-economic impacts achieved by the AMC: Euro 728 million of GDP are attributable to the companies of Fondo Italiano d'Investimento's direct and indirect investments, and more than 9,900 people are employed.
The AMC launched the FOF Impact Investing Fund, the first fund of funds in Italy focused on the impact investing market and qualified as a fund of funds under the EU SFDR Regulation. Impact investing consists of investing in start-ups, companies and funds that are linked to measurable social objectives and at the same time generate an economic return for investors. Investments that are, in fact, in an intermediate territory between philanthropy and sustainable investments.
A fund of funds, in addition to the other eight instruments in this area launched so far by Fondo Italiano, which aims to contribute to the goals set out in the 2030 Agenda for Sustainable Development by investing exclusively in Article 9 funds (which have a sustainable investment objective) or in Italian social enterprises. On the market for about a year now, FOF Impact Investing aims to invest, indirectly through funds or directly in co-investment, in companies based in Italy or even in European funds. In November 2022, the closing of EUR 50 million fully subscribed by Cassa Depositi e Prestiti was finalised. Goal? Attracting expertise and investment to the Italian market and, in parallel, bridging a gap in the Italian private capital ecosystem.
Luigi Tommasini, senior partner at Fondo Italiano d'Investimento and head of the fund of funds area, explains how, in practice, these investments impact reality.
“We recently invested in FIDEC, the fund managed by Xenon that promotes private equity investments in companies with enabling technologies for the energy transition. The fund aims to invest in companies operating in sectors such as recycling and waste management, renewable energy technologies, water management and treatment, biomethane and biofuel technologies, as well as the digital and sharing economy.”
What are the next steps?
“We are working with Italian and foreign alternative investment managers to continue to build strategic partnerships with other realities that, with Fondo Italiano d'Investimento, intend to deploy investments capable of combining attractive returns for investors with planning to achieve tangible and measurable results in terms of social, environmental and governance impact. Interesting funds are emerging in the healthcare, well-being, agrifood and third sector verticals.”
Can you give us an example of similar investments in Italy?
“Among the Italian excellencies in which the Fund invests is, for example, FRIEM. A company that has been making current rectifiers since 1950, indispensable for powering industrial processes that are by nature very intensive. Today a truly international group, with offices and production sites on every continent, with subsidiaries in the USA and Brazil and a sales office in Indonesia. In the next three years, it plans to grow in the traditional industry and green hydrogen sector, to reach a production value of around Euro 70 million.”