“The energy shock has practically subsided and even the increase in transport prices is no longer at the emergency levels of a few months ago. In 2023 we expect a growing economy and after all almost all of our investees have been running on the stock market for two months now. Of course, the unknown factor of the war in Ukraine remains and it will be necessary to get used to a trend in interest rates that will be far from the zero of recent years, but one must say that we have experienced the anomaly in the past. We also expect that the phenomenon of reshoring (the return of many products that had left Italy) can give an important boost to the recovery of GDP”.
Talking is Vincenzo Polidoro, the managing director of First Capital. First Capital, listed on the former Aim since 2010, is a financial holding company that studies the Italian SME market for a living (with a turnover of up to 150 million euros) based on an active approach. The goal is to identify leading companies in the various market niches that have “capable” management and sustainable development plans. And help them. Simplifying: a sort of private equity which does not, however, need to bring home profits and results in short order and therefore can act in a long-term perspective. Its subsidiaries include Piquadro, MutuiOnline, the Orsero group, Elica, Intred and Cellularline.
Small and medium-sized Italian enterprises remain with a strong family footprint, but the degree of management also externally is increasing. A proof of maturity?
“Look, certainly there is greater openness to managers who come from outside, but then it depends on the individual cases. There are still realities in which families are sitting comfortably at the command floors without having any vision of what could happen in the natural phases of generational transitions. Obviously these are realities that do not interest us. In general, however, I can tell you that Italian companies are less bank-centric than in the past and more aware that new capital can come, for example, through bonds or mini-bonds or through listings”.
Would incentives be needed to make them grow?
“We also recently had meetings with representatives of the world of politics and I can tell you that this government has a particular sensitivity towards the needs of small and medium-sized enterprises. There is awareness that by increasing their capitalisation, a virtuous process can be set in motion which increases productivity and turnover and therefore creates new jobs”.
In short, the cost of any tax incentives would pay for itself…
“That’s right.”
What levers could be acted upon?
“One of the hypotheses is to incentivize large institutional investors. From insurance companies to pension funds, we are talking about assets of billions of euros that could flow into the real economy. But not only. Because there is also a regulatory moral suasion to simplify the listing mechanism or the possibility of investing both in listed companies and in those that intend to do so”.
Are there any sectors that you value more carefully?
“It depends on market trends: there are many small and medium-sized companies in the more technological areas – software development, cloud or cybersecurity – which need support both from a financial point of view and the contribution of specific managerial skills for growth dimensional. But obviously we also evaluate more traditional businesses and companies”.
Regardless of the sector, then, one of the major economic issues is represented by the cost of money, which could still increase.
“The danger more than the rate hike – sooner or later it had to happen – is the suddenness of the “squeeze” that has put the most indebted companies in difficulty. We certainly won’t go back to the era of zero interest rates and normality for the next few years will be to pay between 3 and 5% to borrow money. Money will no longer be free and it is good that our entrepreneurial fabric comes to terms with this new scenario as soon as possible”.