Italian Economy Minister Reveals Plans for State Investment Fund

(April 4, 2011) — The Italian government will proceed with plans to create a state investment fund, reflecting the sentiment that the government must become a more active player in the financial environment of the economy, the Wall Street Journal reported.

The decision to create a state investment vehicle comes as Italy battles competition from French firms that hold sizable stakes in Italian companies and are looking to exert greater influence and control over them. According to the WSJ, Italian Economy Minister Giulio Tremonti indicated that the anticipated fund would mirror France’s Fond Stratégique d’Investissement, a sovereign fund that is 49% owned by the French state and 51% by Caisse des Depots et Consignations, which is fully owned by the French state.

The economy minister said that Italian companies are often small while the global economy is increasingly dependent on large enterprises. Furthermore, he told the news service that Chinese businesses have stressed to him that Italy “needs a big state company or a big multinational.”

In the ownership of the planned fund, Tremonti revealed plans to incorporate Cassa Depositi e Prestiti SpA (CDP), a joint-stock company under public control, with the Italian State owning 70% and the remaining 30% held by a group of bank foundations.

The decision to create the Italian state investment fund is a direct reaction to the acquisition of a 29% stake in Parmalat SpA by Groupe Lactalis, its larger French dairy rival, according to the WSJ.

Magnifying Italy’s fears of foreign takeovers, French-controlled EDF, which has a controlling stake in Italian power company Edison, consolidated its hold over the firm. At a board meeting on April 26, EDF, which controls about 50% of Edison, said it would replace the Italian head of the firm since 2001 with Bruno Lescoeur, the French head of EDF’s gas business. EDF, which is looking to develop its presence in Italy, is unhappy with the way Edison is managed, sources close to the group told Reuters.