Libya’s Italian Interest

Ashby Monk

Libya has been on a spending spree in Italy: Reuters lists no less than eight investments at various stages of consideration and implementation. This influx of Libyan capital stems from an August 2008 treaty between the two countries which saw Italy offer $5 billion over 20 years to Libya as compensation for colonization. The political relations warmed and the economic relations followed.

While a variety of investment vehicles are being used, the Libyan Investment Authority is clearly in the mix:

“Libya’s $65 billion sovereign wealth fund roared onto the Italian scene last year with a 4.6 percent stake in No.2 bank UniCredit and then a stake in oil company Eni SpA. It is now eyeing power company Enel SpA and is in talks for a joint fund with bank Mediobanca SpA.”

The potential for a joint fund is interesting. As I mentioned in a previous post, these joint funds offer considerable opportunities for investors to gain knowledge and insights about a foreign environment. Setting up such a fund seems to suggest a long-term engagement on the part of Libya. This appears likely: Muammar Gaddafi is personally visiting Italy this month to reinforce the burgeoning economic partnership.

3 Responses to “Libya’s Italian Interest”

  1. 1 miamiohio June 9, 2009 at 2:32 pm

    Interesting post, particularly about the LIA’s interest in the Italian power company. The investment in Eni SpA makes a great deal of sense for the country since it is the largest foreign oil company operating in Libya, while also having stakes in more than ten other African states, reflecting Libya’s use of the LIA to gain regional influence. It is interesting to consider the transition of Libyan sovereign wealth from investing in mantle piece investments such as in Juventus football club, to ones that offer potential for significant knowledge and technology transfer. Has Libya been active in any other foreign markets outside of the African continent, or has its interest in Italy been the exception rather than the rule?

  2. 2 Ashby Monk June 9, 2009 at 2:42 pm

    I think the majority of their investments are in North Africa, which as a strategy would seem to fit with their growing interest in Italy. I.E. They invest relatively close to home. See: on the bottom of the page.

  1. 1 The Libyan Investment Authority’s Whereabouts « Oxford SWF Project Trackback on March 1, 2011 at 2:11 pm

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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