fdi attraction: the italian policy

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FDI ATTRACTION: THE ITALIAN

POLICYRICCARDO MONTI

President Italian Trade Agency

MEETING INVEST IN LOMBARDY

MILAN, OCTOBER 14th, 2015

Riproduzione vietata – all rights reserved ©

1

AGENDA

• KEY FACTS AND TRENDS

• FDI ATTRACTION


2

Exportof goods(bln €)

Italy

% change y-o-y

Germany

France

1,093.2 1,134.8

428.5 442.6 437.4

CAGR2011-14

+1.9%

+0.8%

+2.3%+3.3% = +3.8

+3.3% -1.2% +0.2%

+3.8% = +2.0%

1,058.9 1,093.6

438.5

Estimation on 1st half

+5.0%

Source: elaborations by MiSE on Istat and Eurostat data

TREND OF EXPORT 2011-2014

Estimation on

1st half

2013 20142011 2012 2015

390.2

398.0

375.9

390.2

206.7

417.7

1st half


3

Machinery and ElectronicsChemical and

PharmaceuticalFashion

Design and Furniture Food and Beverage

1.5%

’13 ’14

2.8%

1.1%

2.3%

1.2%

-0.1%

-0.8%

’12

1.3%

-2.8%

CAGR

'11-'14

1.7%

0.7%

-0.2%

Source: elaboration by MiSE on Eurostat data

’14

3.4%

6.0%5.8%

’12

6.0%

5.9%

’13

0.3%

-1.5%

2.7%

1.0%

CAGR

'11-'14

5.1%

1.5%

3.2%

’14

3.3%

5.4%

’13

3.8%

5.0%

-1.3%

3.7%

2.9%

5.5%

1.9%

’12

CAGR

'11-'14

4.6%

1.4%

4.0%

2.7%

’14

3.8%

1.3%

-0.1%

’12

-1.6%

2.6%

’13

0.2%

2.9%

2.5%

CAGR

'11-'14

3.1%

1.7%

-0.1% 1.4%

’14

5.4%

1.6%

4.7%

’12

4.9%

’13

-0.6%

3.1%

6.8%

CAGR

'11-'14

5.1%

4.3%

2.0%

For Germany and France estimated values based on January-November 2014 data

TREND OF EXPORT BY SECTOR 2011-2014

% change y-o-y % change y-o-y % change y-o-y

% change y-o-y % change y-o-y


4Source: elaborations by MISE on Istat data

Destination areas

(1st half 2015)

Export trends

(1st half 2015)

ITALIAN EXPORT: DESTINATION AREAS AND TRENDS


5Source: elaboration by MiSE on WTO data – 2015 forecast by Prometeia

G-20 countries

Balance

in manufactured

goods

Italy

Bln €698

294

164

112 9637 31

-28 -30 -31-59 -61 -82

-117-474

Ch

ina

Ge

rma

ny

So

uth

Ko

rea

Ja

pa

n

Italy

India

Ru

ssia

Bra

zil

Me

xic

o

Fra

nce

Tu

rke

y

Canada

Au

str

alia

UK

US

A

5th

Italy Forecast 2015

Surplus = 104 bln €

Balance 2013 2014

4229Industry

Bln €

8988Energy excluded

9694Manufactured goods

Change

‘13-’14

+ 44.2 %

+ 1.6 %

+ 1.4 %

TRADE BALANCE IN MANUFACTURED GOODS 2014


6Source: elaboration by MiSE on WTO data, converted according exchange rate $/€ = 1.3

2.8

1,093

8.4 2.9 3.1 2.4

549

% on total

world export '13

390

7.7

1,213 416 437 352

3.8

Total export '13

(bln €)

ITALY HAS MAINTAINED MOST OF ITS MARKET SHARE

IN 2013 VS. 2000


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• According to the PMI manufacturing sector index, in May Italy ranks higher than Germany and France, thanks to our “impressive export growth”

• Italy is among the strongest performers and appears “to be staging strong recovery”

Source: Markit Eurozone Manufacturing PMI, June 2015.

54,8

51,1

49,4

46

48

50

52

54

56

Italy Germany France

50 = no change

• PMI is an advance indication

of what is really happening

in the private sector

economy.

• Based on monthly surveys

of a representative panel

of around 3,000 Eurozone

manufacturing firms.

• Tracked variables:

- Output

- New orders

- Stock

- Employment

- Prices

EUROZONE PURCHASING MANAGERS’ INDEX (PMI)


8

HUGE POTENTIAL TO INCREASE INTERNATIONALIZATION

OF ITALIAN SMES


9

6x

SIMEST

Total resources

to support Italian export

+ 50 bln €

additional exported

goods in 2016

in key countries

+ 20 bln $

of FDIs inflows

towards Italy

3 targets

+ 22k

additional exporting

enterprises

Supporting SMEs

to access global

markets

Expanding market

shares in countries

where the Italian

potential is higher

Attracting capitals,

buyers and FDIs

to foster economic

growth

Source: ICE

IN 2015 THE LARGEST PLAN TO SUPPORT

‘MADE IN ITALY’ GOODS

ICESACE

Million €, 2014

vs. Exim Bank

Equity Interest rate

support to

exporting firms


10

Italian specialties

Food

AutomotiveFurniture

Ships,

Railcars, Planes

Fashion

0%

5%

10%

15%

20%

25%

0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000

Export in 2014 (Million €)

WHERE TO INVEST?

Source: Deloitte elaboration on Istat data

Please note: this chart doesn’t show sectors with negative export growth

To

tal

ex

po

rt g

row

th b

etw

ee

n 2

01

2 a

nd

20

14

Pharmaceutical

Products

Pharmaceuticals industry is growing at stunning rates, machinery

and industrial automation is a long-time Italian leadership.

Machinery and

Industrial Automation

Mature Italian Export

Leaders

Great M&A opportunities …

Consumer Business

Industrial

Deloitte main industries:

Up & Coming Exporters

Construction

Materials


11

Some key figures

IT’S TIME TO INVEST IN THE ITALIAN REAL ESTATE

Seeing the potential• The long awaited recovery in the Italian real

estate market started in 2013 and continued

in 2014 with a total of € 5.3 billion of direct

investment in the sector.

• A strong boost came from the second half of

the year due to a series of domestic and

external factors that improved the confidence

of investors that started to look at the Italian

market with strong interest .

• In 2014 the volume of foreign investments,

both European and non- European, reached

the 80% of the total size, returning to pre-

crisis level. After years of global crisis, Italy is

back in the sight of foreign investors.

• In 2014 the most active investors were

opportunistic American funds while sovereign

funds in the Middle East continued their

acquisition of trophy assets

• Foreign investors have regained

confidence in the Italian market faster than

their local counterparts

• Investment Volume 2014/2013 (€ bln)


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Residential property price index (31/12/2000 = 100)

Source: OECD

Residential property price index in Italy reflects

fundamentals and there is no risk of bubble

A STABLE REAL ESTATE SECTOR

70

90

110

130

150

170

190

210

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Germany Ireland Greece Spain France Italy UK Euro Area


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AGENDA

• KEY FACTS AND TRENDS

• FDI ATTRACTION


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A new law will:

• improve the business regulations measured by

the World Bank Doing Business indicators, in

order to move up in the WB ranking

• simplify the regulatory system for the real

estate sector:

- establish a common glossary

- new rules to file a legal appeal

The new «Doing Business» Act

50 measures to enhance competitiveness and attract resources

«DESTINAZIONE ITALIA» AND «DOING BUSINESS»

REFORMS PLAN

Approved

65%

Not yet

approved

35%


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• ITA Agency: the only reference

to foreign investors that

supports throughout the life cycle

of the investment carrying out

three tasks:

• Systematic collection of the

demands, through the

implementation of targeted

meetings of promotion /

investment generation and the

provision of an integrated CRM

• Preparation of the tender,

through sectoral insights from

expert

• Investment tutoring, through

practical support for the

establishment and systematic

management of after care activity

(with the support of Invitalia)

One Stop

Shop

Execution

• Check every six months of the

achievement of prefixed results

• Overseeing of strategic

investments that are in critical

situations (high-level tutoring)

MISE

Committee

Analysis

• Define a clear strategy for the

attraction of FDI identifying type of

investors, countries and priority

areas:

MISE

Committee

Direction

THE PROCESS FOR THE ATTRACTION OF FDI


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Inventory of public assets

Ministry of Economy and Finance

Department of the Treasury

Survey of public realestate assets

Web display

Government Administrations, Regions, Provinces,

Municipalities, Chambers of Commerce, State Property

Agency, Customs, etc.

• A user friendly simplified interface;

• Navigable pages on three successive levels,

drilling down to the information required for

due diligence

Data source

More than 1.000 identified assets

• Two categories, according with the different categories of

potential investors

• Located in the most interesting italian areas (Milan, Rome,

Florence, Bologna, Turin, Genoa, Venice, Naples, Bari,

Catania, etc.)

• Minimun size 1,000 smq (up to 3,000 sqm for assets with

office destination)

• Range value: € 10-15 Mln

• Properties available for sale

BUILDING THE PORTFOLIO: PUBLIC REAL ESTATE


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Total Not interesting forforeign investors

Italian companiesnot open to new

investors

Eligible for directinvestment

There are 160 companies

which are defining the best

options to relaunch production

and investments, with the

support of the Ministry of

Economic Development and

Local Authorities

Activities carried out

Experts of the Ministry and consulting firms have identified the companies

with the highest potential to attract FDI depending on:

• Size of the enterprise

• Ownership structure

• Internal assets

• Finance

• Positioning and competitive advantages

• Investments required

~ 160

~ 60

BUILDING THE PORTFOLIO: RELAUNCH COMPANIES


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Profile of about 60 companies that that are well-positioned to build partnership

with, or be acquired by, international investors.

COMPANY DESCRIPTION AND ACTIVITIES

Background information on location, ownership, commercial

activities, and supply structure context

KEY FINANCIAL AND OPERATIONAL INDICATORS

Overview of commercial and financial performance over the last

three years

REASON WHY

Overview of the sector and macro-sector performance over

the last three years, including export trends (where

relevant)

REFERENCE SCENARIO

Analysis of target investors/partners, preferred operation,

strength points and commercial challenges for the company

and the sector, future potential markets, and public

incentives (where available)

BUILDING THE PORTFOLIO: CORPORATE

RESTRUCTURING


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Company Investment Industry Region Issues Our activity Next steps Value

New Petrol

Joint venture

Oil field n. 17 Oil & gas Pidmont Authorization denied for...

Delays in procedure n. 75.

First assessement

Contact with President of Region

Proposal of a new Decree

Meeting with Local Authority

Start new process at Ministry of

Economic Development

1.3 billion euro

5,000 workforce

Energy

Solution

Solar power Green energy Lazio New emission limits values

New environmental assessment

required

Contact with Ministry of

Environment

Meeting with Directorate General

Follow up with Directorate in

charge.

170 million euro

220 workforce over 2 year

Luxury Motor

Company

Electric engine Automotive Sicily Incentives are not available

before 2016

Need to reschedule activities

Assessment of existing grant

scheme at Regional level

Meeting with FDI competence

center

Analyzing EU programs for R&D 750 million € for new R&D facilities

55 additional jobs

New

Vegetable Oil

Palm oil plant Food Veneto Need of new port infrastructure Contact with the Port Authority

Built task force with the Ministry of

Transport

New Port Plan delivery 125 million € for new processing

plant

35 additional jobs and new

workforce at port

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Caring of foreign investors in Italy

• Delays in administrative

procedures

• Optimal use of incentives (both

National and Regional)

• Contact with Italian Institutional

investors

Frequent issues

• An office dedicated to assist foreign investors

along the entire project cycle (pre and post

investment)

• Customer care for about 20 investments

throughout Italy

• 6 billion euro additional FDI involved

• 100% issues addressed since Sept. 2014

• 65% issues closed since Sept. 2014

Current actitvities and results

• Strengthen the office with new resources

• Promote the activity of the office among foreign

Ambassadors in Italy

• Build an effective CRM system to integrate pre and

post investment assistance together with Regional

offices

Next steps

CUSTOMER CARE


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A new dedicated website

Online contents

• Italian excellence, opportunities for

foreign investors, Government policies

to attract FDI

Communication campaigns

• WSJ, FT, The Economist, Google e

YouTube

• Starting a business

• Hiring and managing staff

• Taxation

• Financial and tax incentives

A new Investment Guide

COMMUNICATE AND PROMOTE OPPORTUNITIES


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• Infrastructures, transportation;

• Defense and national security;

• Telecommunications, energy;

• Finance and insurances;

• Public services;

• Research & development;

• At least turn over above 300 Mln €

and over 250 employees.

• Transportation infrastructure;

• Electricity, gas, water,

telecommunication networks;

• Power plants;

• Health care and local services;

• Diversification, no more than 20 % of

the fund can be invested in a single

company.

• Participation in companies of

“relevant national interest” in target

sectors

• Medium – long term investment

approach in highly valued ROI

companies

• Minimum investment = 50 Mil. €.

• F2i has a portfolio of equity stakes

in companies active in all

infrastructure sectors, primarily in

Italy.

• Two vehicles, F1 (fully invested, 1,

85 Bln Euro.), F2 (610 Mln €

invested, up to 1,2 Bln €)

• 15 years investment policy.

1

2

Description Target For Investors..

Co-investments:

• Joint Venture and agreements of FSI

with Institutional Investors such as

Sovereign Wealth Funds, e.g.

agreement with Russian RDIF (1bn €)

and IQ Made in Italy Investment

Company JV with Qatar

Holding LLC (QH) (2 bn €)

• Equity and bonds.

Co-investments:

• Participate in the Closed –end

Investment Fund F2i, aimed at playing a

significant role in the companies’

governance.

• E.g. Alerion spa, Enel rete Gas; Geasc,

HFV, Interporto Rivalta Scrivia; SEA

Milan, etc.

Will support investors with:

• a tutor who will act as their unique

contact point, and by providing a

“certainty package”, including

regulatory, timescale and fiscal

certainty.

• specific dossier on potential

investments in green field, brown field,

real estate…

• ITA is part of a National policy to

attract foreign investment and

improve the competitiveness of

Italian firms, assisting the foreign

investor during the whole life of the

investment cycle.

4 • Mostly private investors, looking at

exported oriented companies with

high growth potential, Multinational

Firms, venture capital, distressed

companies……

Real EstateInvestment Funds

• IVF Plus invest in real estate existing

private assets (office, commercial,

hotel, residential) to enhance their

value by change of use, income

generation, …

• Invimit owned by the Ministry of

Economy and IVF Plus by CDPI

Sgr invest and support the disposal

of real estate owned by public

bodies

3 • Mostly private investors looking for

high yield investment.

CO

-IN

VE

ST

ME

NT

SD

IRE

CT

IN

VE

ST

ME

NT

S

OUR SUPPORT TO FDI


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fdi attraction: the italian policy

Economy & Finance