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Italy to launch privatization drive with Fincantieri

Italian state-owned shipbuilder Fincantieri will apply to list in Milan as early as Tuesday, firing the starting gun for what officials predict will be Italy's largest privatisation programme since the 1990s, with a plan to raise 12 billion euros ($16.6 billion).

Matteo Renzi, Italy's prime minister, has stuck to privatization targets unveiled by his predecessor Enrico Letta in January, unveiling a program to reduce Italy's public debt of more than 2 trillion euros for the first time in six years.

The Costa Fascinosa, built at Fincantieri's Marghera shipyard.
Andrea Pattaro | AFP | Getty Images
The Costa Fascinosa, built at Fincantieri's Marghera shipyard.

Fincantieri's shareholder, a state financing vehicle owned by the Italian Treasury, will file to list up to 49 percent of the shipyard group. Analysts estimate Fincantieri could be worth more than 1.5 billion euros.

The privatization will also include a 600 million euros capital increase after it was approved by Fincantieri's shareholders on Monday.

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"The intention is to list the company in Milan before the summer," Giuseppe Bono, chief executive of Fincantieri told the FT.

Following the listing of Fincantieri, the government aims to sell 40 percent of postal services operator Poste Italiane and 49 percent of air traffic controller Enav, allowing it to retain controlling stakes.

Separately, Cassa Depositi e Prestiti (CDP), the Treasury-controlled financing agency that manages the postal savings deposits taken by Poste Italiane and owns Fincantieri, plans to sell minority stakes in Sace, an export credit agency.

Also to go are the government's 4 percent holding in energy group Eni; a 13 percent stake in STMicroelectronics, a semiconductor manufacturer that is partially owned by the French government; Grandi Stazioni, which manages Italy's largest railways stations; and CDP holdings in Snam and Terna, operators of gas and electricity grids.

Fincantieri is the fourth-largest shipbuilder in the world by orders. In 2013, it received 5 billion euros of orders, bringing the value of its portfolio to 12 billion euros. It made a net profit of 85 million euros in 2013 on earnings before interest, tax, depreciation and amortization of 298 million euros. It has 20,000 employees in 21 factories on four continents.

Read MoreDoubts over Renzi's 'ambitious' reforms for Italy

Bankers consider Fincantieri the easiest of Italy's wholly state-owned companies to privatize because it is already run as a private enterprise. But they are more sceptical about the timeframe for listing those companies, such as Poste Italiane, that are still closely entwined with the state.

Italian officials have said part of the proceeds from the Fincantieri stake sale would be reinvested in the shipbuilder, while CDP could make a special dividend to the Treasury that would also go towards debt reduction.

Co-ordinators for Fincantieri's listing are Banca IMI, Credit Suisse, JPMorgan, Morgan Stanley and UniCredit. Joint bookrunners are BNP Paribas, Citi, Deutsche Bank, Goldman Sachs, HSBC and Mediobanca.

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