State-owned Italian bank Cassa Depositi e Prestiti (CDP) is to set up a private equity fund to help family businesses go public, and thereby help boost the country’s economy. The bank intends to buy minority stakes in promising companies that are seeking to build up scale. This move could help double the number of companies on the Milan stock exchange. CDP will act as an anchor investor and also invite foreign investors and sovereign wealth funds to buy shares in the companies.
Italy is the home to 750,000 family businesses that make up 90% of the private sector. Car manufacturer Fiat, founded by the Agnelli family is one of the most successful, with revenues reaching €96 billion in 2014. However, since the global financial crisis, in which Italy suffered a long recession, many large family firms have been taken over by foreign competitors. In July, Germany’s HeidelbergCement AG bought the Pesenti family’s 45% stake in Italcementi for €1.67 billion. In 2014 the Merloni family sold its 60% stake in their manufacturing company Indesit to US rival Whirlpool for €758 million.
Thus there is no doubt that family firms in the region need help, but the success of this initiative depends on the attitude of the local family firms towards public listing. Family firms are generally reluctant to go public to defend their socioemotional wealth, i.e. the identity, legacy and relationships that are wrapped up in the family business.