It put its hands on Intesa, Unicredit, Motepaschi, and Telecom. The biggest investment management corporation in the world has set its sights on Italy. Why? And what will the consequences be? We discuss the issue with Alberto Forchielli, a finance expert.
The last acquisition was MontePaschi. First, with 5%, it became the second largest shareholder of IntesaSanPaolo, overtaking historical partners like Cariplo, while its 5% makes it the principle shareholder of Unicredit. Blackrock, an American fund, is buying pieces of the Italian banking and industrial system in 5% chunks. Today, it even holds 5% of Telecom, but last fall it held 10% by conditioning the showdown between Telco and small shareholders. In addition, it holds important shares in Fiat, Generali, and Mediaset. Who’s behind Blackrock? And why have they set their sights on Italy?
Anyone who pages through The Economist from December 7th couldn’t forget the black, little Kubrick-esque monolith planted on the cover above the title “How the world’s biggest investor is changing the financial landscape.” Born in 1988, the year after the great Wall Street crash, Blackrock invests throughout the whole world today.
“The first rule is money making is buying low, and today in Italy investors can buy at sale prices, especially bank securities,” Alberto Forchielli, founder of the Mandarin Capital Partners Fund and expert on China (which he regularly discusses with the US Congress) explains to Europa. “Opportunities were already visible two years ago, it’s a very fragmented market: with small shares you can buy a lot.”
Blackrock’s fortune was to be born at the right moment, “when the world of hedge funds was exploding, it grew via acquisitions and it’s very tied to the US government,” which helped with the sale of Bear Stearns and the AIG bailout: “it kept its distance from mortgages and was the first fund to become truly international: I have Blackrock business cards from practically all over the world,” explains Forchielli.
Four years ago, the US edition of Vanity Fair wrote a long article recounting how little was known about the most powerful fund in the world, and manages $4.342 trillion; almost double the Italian public debt. Tall, bald, and near-sighted, 60-year-old Larry Fink is among the founders of Blackrock and is currently the CEO. He has been defined as “the most important person in global finance,” and despite this, “virtually unknown in Manhattan,” where he lives in an apartment on the Upper East Side with his wife 38-year-old wife, Lori. Calm, educated, and meditative, Fink is described as “the Wall Street Wise man,” apparently in complete contrast to the financial archetype from the 1980s, Gordon Gecko.
For Forchielli, the arrival of huge US funds in Europe is easily explained. “At this point in time, they are finding themselves in the position of not being able to give their investors a good performance for 2014-2015 because the interest rate on fixed income is low, emerging markets are closing, China presents big uncertainties, and America is overvalued. Europe is the only market that offers some chance, however weak the recovery it lightens the risk of debt.”
And Italy? “It’s a lottery, to invest you need people that have the stomach for risk: it’s seen as a country that’s growing abroad but is blocked internally, a country on autopilot.”
In reality, Forchielli has zero faith in financial reports. “Judgments on our country are written by kids in New York that don’t know a thing about Italy: just like they destroyed us in 2011, today they exalt us. Finance is stupid, it either undervalues or overvalues, it follows a cycle, and it’s a world of presumptuous, overpaid idiots.” Who decide the fate of the world? “Well, right now yes, just think of the effects on spread.” Last question: what do you think of Davide Serra, Algebris founder and Matteo Renzi’s friend? “A battery chicken.”
di Giovanni Cocconi, published in “Europa” on 19 March