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Italy in talks with UAE sovereign funds to lure investment

Italy in talks with UAE sovereign funds to lure investment

Italy, the eurozone’s third largest economy, is looking for partnerships with UAE sovereign wealth funds to jointly invest in Africa and Asia, as it looks to expand trade and investment relations, its Trade Commissioner in the UAE said.

“We would like to engage UAE sovereign wealth funds to be partners … in Africa to joint venture with them and to fund projects, as … Africa will be the next lion [big market] in economic terms,” Gianpaolo Bruno, who oversees trade promotion in the UAE, Oman and Pakistan, told The National in an interview.

“Southeast Asia would be another destination. Countries look more and at China and Southeast Asian countries … [and] we are also looking at that as well.”

Italy,which has struggled to kick-start growth, is laden with debt and is at odds with European counterparts on spending and budgetary plans. Rome needs foreign direct investment to help stabalise its economy and drive growth. The government of Italian Prime Minister Giuseppe Conte is in talks with UAE investors and sovereign funds for potential investment in Italian logistics, tourism and technology-intensive industries.

“We are engaging them [sovereign funds] in order to understand where we can partner with them successfully and of course we would like to see them more and more engaged in Italy. We would like to see more investment flows from the UAE,” Mr Bruno said. He declined to name the sovereign funds.

Italy is planning to setup at least two large-scale free zones adjacent to ports in the southern part of the country. Italian authorities have already initiated talks with DP World, the fourth biggest ports operator in the world, and Jabel Ali Free Zone Authority in Dubai for potential partnerships for the development of the proposed free zones.

Initial response for the UAE counterparts has been “very good” for the projects, which could be the “gateways to access the important markets in Europe”, he added.

Italian companies have major investment interests in the UAE, especially in the country’s oil and sector, one of the biggest driver of foreign direct investments in the UAE. Italian oil and gas major Eni, in January won three concessions in Sharjah’s first-ever competitive bid. The firm has also been on a winning streak in Abu Dhabi, clinching several deals as the emirate forges ahead with plans to boost oil and gas capacities.

Rome is vying to boost non-oil trade between the two countries. In April, Luigi Di Maio, Deputy Prime Minister and Minister of Economic Development of Italy, led a large business delegation to the UAE, the biggest export market for Italy in the Mena region.

Italian exports to the UAE last year reach €4.7 billion euros (Dh19.4bn) while the UAE exported €1.1bn worth of non-oil goods to Italy. Italian exports, which saw a decline in the past two years on the back of a global economic slowdown and a three-year oil price slump, are expected to rise as much as 7 per cent by 2020, Mr Bruno said.

“We reached maximum level of exports [to the UAE] in 2015, which was almost €6bn, but given the economic situation and volatility in the market … our exports recorded a contraction,” he said. “If we can manage a CGAR [compound annual growth rate of] of 5 per cent we will be very happy. It is highly strategic market for us and that is the reason why we are doubling our efforts to further develop our bilateral trade relations.”

Like the UAE, Rome has looked to boost small and medium-sized businesses, while also focusing on start-ups in the technology sector. In March Italy’s government rolled out a €1bn innovation fund to help technology firms and start-ups grow and form joint ventures with other companies inside the country and beyond.

Financed by the new fund, these Italian firms will look to take minority stakes in UAE technology start-ups with a view to jointly develop and grow companies, Mr Bruno noted. Last month the two governments signed an agreement to facilitate such deals, which Mr Bruno said will be between €2 million to €10m for seed and early stage financing.

UAE tech firms and start-ups will also be able to invest and take stakes in Italian firms.

“We are working now on both sides [UAE and Italy] to select the start-ups that have the potential,” Mr Bruno said.

The first meetings will take place probably in September or October in Italy, followed by a meeting here in the UAE.