Portfolio Management

Designing and implementing a portfolio management framework

The establishment of Growthfund was a pivotal reform for Public Administration and the management of public assets in particular. Prior to Growthfund’s establishment, the management framework was fragmented, with multiple involved parties and frequent overlap of competences. As a result, it was very difficult to design and implement a single strategy for the development of public assets and, ultimately, to increase their overall value. Fully aware of its role as the executive vehicle for public policies implementing its Strategic Plan, Growthfund designed a framework for managing its assets, around two axes:

  • A. General/Groupwide:

    Growthfund is responsible for the coordination and general alignment of its subsidiaries with specific standards and targets, which are shared by all subsidiaries. In any case, the subsidiaries are urged to improve the quality of the products or services they offer, to reduce their environmental footprint and to implement other relevant actions.

  • Β. Per subsidiary:

    Growthfund’s management framework includes the analysis of the internal and external environment of each subsidiary. Internally, the level of maturity and the strengths and weaknesses of each subsidiary are analyzed, while the circumstances governing each sector (external environment) are also taken into account. As a second step, subsidiaries are classified into categories. For each category, a specific approach has been set regarding Growthfund’s role as a holding company, as the parent company, will be called upon to play. The main groups into which the portfolio companies have been classified are the following:

  • Companies that are leaders in their sectors, and Growthfund’s role in these cases is purely supervisory, provided the companies are mature and perform well.
  • Companies that should evaluate their development through new activities and/or segments in which they were not active up to now.
  • Companies that may not be able to develop new activities but are capable of performing better in their current activities.
  • There are also companies where key activities need to be undertaken and their strategic priorities need to be updated.

Classifying subsidiaries with similar characteristics into a specific category makes it easier to implement Growthfund’s strategy and monitor the achievement of its goals. For instance, for subsidiaries considered to have challenges in the execution of fundamental actions, Growthfund must act as an Active Shareholder, centralizing key functions, such as – for example – the group procurement system.

Quality governance of the SOEs is believed to be the key success factor to achieve Growthfund’s objectives.