Neapolitan flavours
Ludovico Capuano reveals to The New Economy's Roger St. Pierre just why Southern Italy warrants international investment21/08/2009
Riddled as it is with seemingly intractable long-term problems, does Southern Italy have a future? The answer, avers affable Naples-based lawyer Ludovico Capuano, is a resounding “Yes!”.
“Of course, the region is still economically backward when compared to other parts of Italy and certainly so against Northern Europe,” he says, but adds: “Yes, It has brought tears to the eyes of politicians, businesspeople and certainly the local community down the years but many of us who live here still perceive that there is enormous unfulfilled potential.
“The euro and our country’s European Union membership have helped us enormously – and let’s face it, Italy is still in the G8 only because of its EU status – but most of those in power in Rome as well as so many people in the industrial north – and especially those who support the Northern League – perceive Southern Italians as being lazy, corrupt ne’r-do-wells and actively resist the flow of both EU and national government investment in our direction.”
Directing a boutique law firm that was founded by his uncle, Fulvio Capuano, who has vast experience in real estate dealings, Ludovico Capuno, who cites the corporate, trust and shipping sectors of law as his own specialities, sees himself as a man with a mission: “There is very real long∞term potential here but companies from outside the region and from abroad who are looking to invest, whether it be from setting up their own operations in the South or through M&A’s, need to be able to log on to the depth of local knowledge and contacts that only a local law firm like ours can offer.”
The practice started 20 years ago as a spin-off from a civil law notary’s firm managed by Capuano’s father, Nicola Capuano; it currently employs five lawyers and two associates in its busy Naples office: “For the present that’s a good workable size for a boutique firm like ours but we look to broad horizons and now have representation in the UK, Dubai and China, as well as elsewhere here in Italy,” says Ludovico.
So what advantages are there for clients using a small law practice like Capuano & Partners, rather than a large, international firm?: “Well, Italians like to do business with people who’s hands they can shake, rather than work at arm’s length. Person-to-person contact is crucial among people who are from a place where family ties matter enormously. It’s often been said that you can’t do business with an Italian until you have broken bread together.
The personal touch
“In our firm, we pride ourselves on providing a truly tailor∞made service, and we are close to our clients – 24 hours a day, seven days a week.
“The big law firms are all to be found in Rome and the North – in big industrial and business centres like Milan and Turin – and don’t tend to venture into Naples. That’s an advantage for us. Conversely, given the lower levels of economic activity here there are less potential clients than we’d find elsewhere.”
Italy has not been able to avoid the current global economic malaise and while others are talking confidently of imminent recovery, Italy has probably still not yet seen the worst of it, believes Ludovico: “We haven’t seen the bottom of the recession yet and I reckon it will be late 2010 before our country’s recovery starts to gather momentum,” he says.
“Inflation is now very low. In fact, we are almost in a deflation situation. At the same time, interest rates remain unhelpfully high because banks apply high spreads to their contracts.
“The M&A sector is starting to warm up once more but things are currently at the talking stage rather than the signing-off of any big deals being immminent.
“Similarly, IPO activity has tended to be placed on hold. Last year we signed a partnership deal with Borsa Italiana, the national stock exchange, and we are working with them to inform and persuade companies of the advantages that an IPO could bring them. Unfortunately, due to the global crisis, our interested clients have put their plans on hold but I hope that by the end of 2010 and into 2011 we will be able to bring them to the market.
“Similarly, the property sector is sluggish here in Naples, especially following the major blow to confidence when the old-established and well-respected Risanamento property development company – an organisation with roots going back to the 19th Century – filed a petition for bankruptcy protection.
“There are still some criminality problems within the construction industry in Naples and we need firm government help in combating this but, at the end of the day, real estate is still a key sector for us because Italians tend to be far more interested in putting their money into property than in buying stocks and shares, so prices have not really fallen a lot.
“Much Italian investment in this sector is still heading abroad, however. Italians have always had a penchant for acquiring property in places like London and New York.”
In these tough times, the legal profession has taken its share of the hammer blows: “The big law firms, especially those working in banking and finance, have had to cut their staffing levels though boutique firms like ours have ridden the storm somewhat better.
“In employment terms, there’s an underlying problem which is un-related to the economic crisis: there are simply too many young people in Italy who want to become lawyers when they finish their university studies.
“To get things really moving here, we need a strong mayor and more help from national government. Naples is a beautiful city but often noisy, dirty, smelly and congested. Progress on infrastructure improvements has been painfully slow. The roads are in a bad state and the subway extension, which is adding a new line and half a dozen new stations has taken a ridiculous 13 years and is still not yet finished. Worse still, the highway to Reggio Calabria is still incomplete 30 years after work started!
“To get things moving, we need to attract bigger, more vibrant companies. At present there are just three listed companies in the entire Campania region and one of them, Ladoria – which is in the food business – is government controlled at present.”
Like everything else, the legal sector has become increasingly complex and international: “Even a small, provincial firm like ours today needs to take a global view. I see our own opportunities arising within our core businesses – that is, real estate and corporate. For our clients, that principally means London, New York and Dubai in the property market and London and Shanghai when it comes to corporate activity.
“We were planning to open an office of our own in Shanghai, where one of our best clients, Nordmeccanica is opening a factory in September. Our expansion is temporarily on hold but that’s a question of delay rather than cancellation.”
The key to getting the engine of growth running again could be a reform of the Italian tax system and a speeding up of the legal process: “Parliament has just approved a major reform of the judicial system but we will have to wait and see if this has a real impact. At present, the civil trial process can take as much as 15 to 20 years, which is obviously unacceptable.
“As for tax, I don’t see any way of making it a less complex matter though one recent development has been parliamentary approval of a tax amnesty which has been designed to persuade Italians to bring money back from tax havens abroad, notably Switzerland, a move which will produce some much needed revenues for a government that is strapped for cash at the moment.”
Ludovico believes Naples has a number of strong USP’s the rest of us should know about: “It’s a vibrant, outward looking city that has a cosmopolitan view of the world. After all, we’ve been occupied and ruled down the years by the Greeks, the Romans, the Arabs, the Normans and the Spanish. Neapolitans don’t always see themselves as Italians. This was, after all, a kingdom in its own right, but they definitely feel part of the international community. Don’t forget, it’s Italy’s second largest port, after Genoa – and it’s very much open for business.”
Further information: www.capuanoepartners.com
