State-owned private equity funds investing in national champions : the case of Italy

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). [Publisher's Text].