Italian firms take direct route in quest for better returns

MILAN: Italy's wealthy family businesses, fed up with a stagnant economy and meager returns on their cash, are ditching their extended circle of financial advisers and striking out on their own.Famous names, including the Agnelli clan that controls Fiat Chrysler and the Del Vecchio family whose Luxottica group makes Ray Ban sunglasses, are bypassing fund managers and private equity firms, and finding their own investments instead.

"Many families of entrepreneurs are actively looking for alternatives ... so they can increase diversification and returns, an objective that fund managers are no longer able to meet," said Marco Stevanato whose family makes glass packaging for the pharmaceutical industry.

"We entered into direct investments, initially focusing on international real estate," added Stevanato, whose business is based in the northeastern region of Veneto.

Italy has an impressive collection of family wealth for an economy that has barely grown in 10 years. It was six times larger than the nation's annual gross domestic product, according to Italian central bank data for 2014.

The country boasts more than 2,500 people who are each worth more than 30 million euros ($31.4 million), according to property consultants Knight Frank, representing a deep source of funds, and investment fees, for the asset management industry and private equity firms.

However, with zero interest rates and elusive economic growth at home, families are searching for higher returns on their own, or pooling resources in what are known as club deals.

Italy's king of the club deal, Gianni Tamburi, founder and chief of boutique investment bank Tamburi Investment Partners, has spent years channeling family funds into direct equity investments ranging from technology to fashion.His most recent effort to pool together family money, a fund known as Asset Italia, showed that demand for direct investing was running hot -- it raised 550 million euros in a matter of weeks.

"It could have been a lot more," said Tamburi whose Milan-based firm now counts about 150 families among its investors.  ­"Twenty years ago, I realized the fact that there were lots of wealthy families that would have wanted to invest in companies without turning to a traditional fund."