Opening Italian alternative funds to retail clients’ investments

Investment regulations are constantly evolving, generating innovation and new solutions for investors. We talked about it with Giovanni Carotenuto from Carotenuto Studio Legale, an independent law firm with an international vocation.

On 15th March 2022, the Decree of the Minister of Economy and Finance no. 19 of 13th January 2022 (the “Decree”) was published in the Official Gazette, which amending the Ministerial Decree no. 30 of 5th March 2015 in order to redefine the conditions for participation in Italian alternative investment funds (“AIFs”) by retail clients, holding medium/large assets. The Decree will come into force on 30 March 2022.

What is an undertaking in a collective investment scheme and which are its main features?                             

Pursuant to Article 1, paragraph 1, sub-paragraph k), of the Legislative Decree no. 58 of 24th February 1998 (the Consolidated Law on Finance; “CFA”) an undertaking in a collective investment scheme (“UCI”) is a “body set up to provide the service of collective asset management, whose capital is obtained from multiple investors through the issue and offer of units or shares, managed upstream in the investors’ interests and independently by the same, and also invested in financial instruments, credit, including credit backed, in favour of subjects other than consumers, by the UCI’s capital, equity or other fixed or non-fixed assets, on the basis of a predetermined investment policy”.

In brief short, UCI’s purpose is to allow investments of sums of money in through financial instruments (e.g., the UCI’s units) of sums of money collected from professional and retail investors on the basis of a predetermined policy, which includes a description of the level of risk related to such investments.

UCIs can take the form either of mutual funds or investment companies (namely, investment companies with a variable capital (i.e., SICAVs) or investment companies with a fixed capital (i.e., SICAFs)). The investment in the latter amounting amounts  to becoming a shareholder of the company in question.

On the contrary, a mutual fund requires the appointment of an asset management company whose assets are distinct and separated from those of the mutual fund managed. As a result, investors receive a fund’s units in exchange for the capital invested therein.

As part of the wider family of mutual funds, AIFs are specialised alternative funds, professionally managed with the aim of achieving absolute performance, independent of market trends.

Which are the main novelties introduced by the Decree?

As a general remark consideration, the Decree has changed the thresholds for making investments in AIFs. Indeed, beforehand, only the following subjects were entitled to purchase in AIFs’ units:

  1. professional investors (i.e. clients who possess the necessary experience and expertise to make their own informed investment decisions and properly assess the risks they take, such as banks, investment firms, other authorised or regulated financial institutions, insurance companies, collective investment schemes and related management companies, pension funds and management companies, large companies that have at least two of the following requirements: their total balance sheet is equal at least to  € 20,000.000; a their net turnover is equal at least to € 40,000.000 and owns funds of at least € 2,000.000);
  2. retail investors who invest a total amount of not less than € 500,000.00;
  3. asset management company’s Board members and employees without any entry threshold.

From the entry into force of the Decree, AIFs can be subscribed by:

  1. retail investors who, within the ambit of an investment advisory service, purchase AIFs’ units for an initial amount not lower than € 100,000.00, provided however that the total amount of such investment does not exceed 10% of their financial portfolio and takes into account that the initial minimum subscription cannot be split.
  2. individual portfolio managers purchasing AIF’s units on behalf of retail clients for an initial amount not lower than € 100,000.00.

As a result, which opportunities for investemnt in AIFs are now available for retail clients?

AIFs are investment funds characterised by: the absence of a link to a particular benchmark, the presence of a fairly high potential return and, consequently, a medium-high risk profile. Moreover, AIFs have a low correlation with the various equity and bond markets.

As a consequence of the entry into force of the Decree, retail investors with medium/large assets are hence being offered the possibility of gaining returns on their investments even when the market trend is in a negative phase, yet bearing at the same time the related risks.

In light of the foregoing, access to these forms of alternative investments to a wider category of potential investors in medium/long term illiquid assets and unlisted companies, may result in increasing portfolios diversification, achieving appreciable returns, and at the same time, providing alternative sources of financing Italian unlisted companies (particularly, SMEs) and fostering Italy’s economic recovery.

The Decree has also established that intermediaries purchasing AIFs’ units on behalf of retail clients and those advising the latter to subscribe to such units must know the financial instruments purchased or recommended, as well as assess their compatibility with their (actual or potential) clients’ best interest. In addition, the latter must provide the above intermediaries with accurate information on concerning their financial portfolio and other investments in AIFs.

How will these novelties impact on an innovative and agile reality such as the Fintechs in our community?

In this scenario, Fintech companies may benefit from the opening of retail investments, particularly in the venture capital and private equity sectors. Given the constant need for higher investments in the real economy, the novelties introduced by the Decree represent a potential boost in the alternative funds’ market, increasing, in turn, the ability to raise capital for the development of start-ups/SME’s with greater development potentials, amongst which we find Fintech companies.

MyCassaCoffee and MyRistoCoffee, two new solutions by BitAndCoffee

The fintech startup BitAndCoffee has introduced MyCassaCoffee and MyRistoCoffee to the market: two new innovative ecosystem solutions that aim to become the perfect solution for the Italian and European SME market. Marco Galli explains more about these new opportunities for companies.

myCassaCoffee: what is it? Why is it innovative?

MyCassaCoffee is the simplest and most intuitive but sophisticated telematic checkout on the market. It is easy to use and manage, but also to set and it is completely self-installing.
It is sophisticated because, thanks to the completely graphic interface, it is very powerful and allows, to carry out very complex tasks turning its use almost into a game with simple clicks. But it is not a game. Indeed, one of the most innovative components of the solution is the analysis system that allows you to automatically have all the sales statistics on departments, products, points of sale, periods of the month but also hours of the day.
MyCassaCoffee is compatible with all the new features, like Cashback, Lottery and also solves the obligation of the electronic receipt. However its technological heart and unlimited potential make its updates easy and fast just like all the apps we have on our cell phone.
MyCassaCoffee solves all current legal obligations for all businesses and for the Ho.Re.Ca world of catering and is also an investment for the future because it opens a world of opportunities both in the management of activities and in the way you can interact with your customers.

Who can use it and with what advantages?

It is necessary for everyone, stores or restaurants, to comply with new legal obligations but it is a solution that evolves business by enabling you to the future: e-commerce, the whole world of new payment systems, OpenBanking functionality with PSD2 and much more.
MyCassaCoffee allows you to create a much closer relationship with your customers by automatically giving a lot of analysis on consumption and purchasing habits.
It also allows you to manage the latest innovations very easily, such as the receipt lottery. Having the barcode reader that speed up all operations. Let’s not forget that in order to comply with legal obligations, merchants will be entitled to a 250 euro bonus.

Who is MyRistoCoffee for and what advantages does it bring?

MyRistoCoffee is designed specifically for the world of catering and, thanks to the maximum immediacy and efficiency, simplifies all the management tasks of your restaurant, bar, diner or farm, allowing you to always put the customer at the center with his needs which is the trick for success.
With these solutions at hand it’s easy to manage data and all the information gained from analyzing sales, but they also help you to check the stock, coordinate the kitchen, have all orders always under control; in short, a team of virtual helpers at your side.

MyRistoCoffee has all the typical functions of a cash register (issuing receipts, closing cash etc. …) but in addition it can manage stocks, remotely control the various cash points, view sales statistics and handle customer loyalty campaigns.

All these applications can be used by groups at the same time, by a waiter or person who receives orders for a take away. We are also creating a version for the customer himself and also for delivery connected with the big platforms on the market.

What is the difference between the two products?

The two products are aimed at different targets by solving the specific needs of the retail world or the world of Ho.Re.Ca. of catering. The solutions have their heart in the cloud world automating the control of multiple stores and a connection with an administration done centrally or even a connection with the accountant that is another feather in the cap of BitAndCoffee ecosystem.
This automatically enables a remote control of the store itself, but also more sophisticated structures such as franchising chains or groups of stores belonging to the same owner, standardizing the operating modes and allowing the interchange of employees in the various sale points and in the various tasks.

You worked in collaboration with Epson, what was the contribution of each?

The collaboration between us was similar to that which exists in formula one between the car’s engine and aerodynamics to achieve record-breaking performance. Thanks to the sophisticated interface of the Epson fiscal printer, the interaction of MyCassaCoffee and MyRistoCoffee takes place through web services. It is as if the engine continuously provides parameters to the central system to modify the performance of the aerodynamics and this, with all the legislative and operational changes on receipts, is fundamental.
In addition, the Epson structure offers a logistics system that opens the door, not only to the Italian market, but also to the European one However, we will talk about this in the next episode.

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