Investment principles for direct investments
CDP Equity invests in companies of significant national interest that meet three main criteria:
adequate income and development prospects
sustainability in the long term
CDP Equity intervenes, based on its Articles of Association, in companies that operate in strategic sectors for Italy’s development that are capable of having a significant impact on the Italian economy. To promote consolidation, expansion and internationalisation paths, CDP Equity’s interventions aim to intercept the most relevant mega-trends: from the energy transition to the digital transformation, from industry 4.0 to international trade. They remain outside the scope of investments in financial holdings of diversified equity investments.
CDP Equity mainly intervenes by acquiring minority shares through a capital increase, promoting a financial structure suitable to pursue the growth plans of investee companies. CDP Equity acts according to market logic. Each operation follows strict investment guidelines. The whole process aims to:
- identify new opportunities
- analyse its strategic positioning and growth plans
- consider ESG (Environmental, Sustainability and Governance) criteria
- assess the adequacy of the company’s organisational structures to ensure development
The unanimous approval by company (investment and risk) committees and decision-making bodies occurs after careful due diligence. The companies that benefit from an investment by CDP Equity undertake to pursue the strategic objectives that laid the foundations for the entry of CDP Equity into the shareholding by agreed deadlines.
The size of the investments
Given CDP Equity’s objectives and mission, investments are subject to minimum size thresholds in terms of amount invested and the beneficiary company’s turnover.
CDP Equity supports the development and strengthening of the companies in which it invests, also through active governance: to support plans for acquisitions, for sector consolidation also internationally and to launch projects dedicated to internal growth and managerial teams. Among the typical commitments that CDP Equity requires and that are needed to evaluate investments in companies' shares, in addition to periodic information commitments typical of market practices, it must be highlighted:
- adequate representation on management boards
- rights of veto on the approval of relevant matters by company meetings and boards of directors
- rights of appointment/approval of some senior staff
- measures that can be taken by CDP Equity in the event of the company underperforming
- a review of the remuneration policies, aligned both with best market practices and with the strategic objectives that led CDP Equity to invest in
- commitments aimed at maintaining key company skills (including maintaining know-how, limiting relocation)
- the adoption of specific criteria aimed at respecting gender equality, diversity and non-discriminatory principles to the appointment of Corporate Bodies and/or Committees members.
Output from investments
CDP Equity operates over a long-term time horizon, by carefully evaluating the liquidity and liquidation forms of its investments, taking into consideration the company’s specific situation and the market context. The preferred liquidity event for non-listed companies is an IPO.