Italian SWF spinout raises €1.4bn for country’s second-largest fund

FSI, a spin-out from Italian sovereign wealth fund Fondo Strategico Italiano, has raised one of Europe’s largest debut single-country funds.

The Milan-headquartered growth equity firm held the final close on FSI I on €1.4 billion last week, chief executive Maurizio Tamagnini told Private Equity International. Limited partners included the Kuwait Investment Authority, Singapore’s government investor Temasek and France’s Tikehau Capital.

FSI I marks Europe’s third-largest debut fund targeting a single country since at least 2008. Fondo Italiano per le Infrastrutture, which closed on €1.85 billion in 2009, is in the top spot, according to PEI data. That fund – managed by F2i – targeted equity stakes in upstream infrastructure companies.

FSI I is already around 25 percent deployed across four investments at valuations below the average for European leveraged buyouts, investment director Marco Tugnolo said.

Italian institutional investors committed 39 percent of the capital, with international institutions providing 23 percent. Sovereign wealth funds accounted for 16 percent of commitments, with banks, insurance companies and family offices providing the remainder.

“Limited partners were concerned about Italy’s economy being impacted by large government debt, which can be a negative factor to some sectors,” Tamagnini said. These concerns were “less relevant” to FSI’s fundraise because 70 percent of the portfolio’s revenue, for example, comes from outside the country through export-led business, he noted.

Tamagnini was previously chief executive at Fondo Strategico Italiano, now CDP Equity, until FSI’s spin-out in 2017. CDP remains a minority owner of FSI, alongside Italian insurer Poste Vita and management.