Italy paid the price during the financial crisis and now it’s time for it to reap the rewards, according to Arc Asset Management’s chief executive officer.

Speaking to Citywire Selector, Angelo Lazzari said the Luxembourg-based firm is currently focused on real estate opportunities with a particular focus on Italy.

‘Within such markets, we believe in two particular sectors: firstly the real estate one, given the opportunity offered by NPLs,' he said.

Lazarri said the wider opportunities offered by recent reforms to Italian legislation has aimed to facilitate the creation of a shadow banking system, which could supplement existing credit sources and make it more attractive bet for outside investors.

‘Moreover, we are focused on the renewable energy sector, with a particular focus on the mini-hydro electric and photovoltaic assets,' he added.

Lazzari said Italy represents one of the countries which paid in the heaviest way for the financial crisis and has also also struggled with a decade of further financial challenges.

‘This is mainly due to the delay in banking restructuring compared to other EU countries, the European SME index reached about 55 points, while the Italian index stands at around 44 points.

‘However, such a gap represents opportunity, as Italy potentially has a large growth pot available and recovery space to align itself with the European average. Therefore, the best market opportunities are to be found in Italy with a particular focus on small and medium-sized enterprises.’

Good investments

With a keen focus on SMEs as opposed to big corporations, Lazzari said smaller companies are popular in a rising inflation environment.

'In the case of rising inflation, the least financialised SMEs, which have not exploited the leverage yet, can be a good investment since they are less exposed to the risk of rising interest rates.

‘We are mainly looking at SMEs showing strong business skills and need of financial resources to bring out and exploit all their potential.

‘However, we are not interested in businesses in which the financial aspect prevails and those companies that have already used massive financial leverage', he added.