The money raised from listing the post office will ostensibly be used as debt relief, although it will barely make a dent in Italy's 2.2 trillion euros of national debt, equal to 132 percent of gross domestic product.
But Italian officials and bankers admit it has significant symbolic value coming in a moment of volatility in the euro zone when Italy is showing the first signs of pulling out of a three-year recession.
"Poste Italiane is a good proxy for Italy," Fabrizio Pagani, head of the office of the Treasury minister, told the Financial Times.
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To bring to the market flagship Italian state companies including the post office, Italian railway group Ferrovie dello Stato and air controller Enav, which have also been earmarked for partial sale, "means to make these companies stronger and more competitive" under the scrutiny of international investors, he said.
Poste Italiane is a national behemoth with 24 billion euros in annual revenues, 420 billion euros in postal savings deposits, 145,000 employees and a business that straddles logistics, savings and insurance.
Its stock market debut is being billed by bankers as an opportunity to create an asset management business in Italy at a time when the sector is flourishing as retail investors switch out of government debt.
The bulk of the share offer is aimed at institutional investors with early marketing receiving a positive response from US and UK-based investors and more limited interest from Asia-based sovereign wealth funds, according to a senior banker.
A five-year business plan aims to increase its revenues to €30 billion and its deposits to 500 billion euros by 2019. It also has a stake in the business of remittances, a growing segment in the Italian banking market reflecting the increasing migrant population in Italy.
But like other postal operators it is suffering a steep decline in its traditional mail business hitting profits.
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Its initial public offering was expected to take place last year but pushed back after a disappointing debut on Milan's exchange last June by Fincantieri, the state-owned ship builder and shipyard owner.
In 2014, Poste Italiane recorded operating profit of 694 million euros, down from 1.4 billion euros in 2013, and net profit of 12 million euros, down from 1 billion euros in 2013.
The draft prospectus is due to be filed with Italy's stock market regulator in the first week of August meaning, under the usual regulatory timeframe, the company would be given approval to list by October, bankers said. Bank of America Merrill Lynch, Citigroup and Mediobanca are joint lead bookrunners on the deal. The Treasury is being advised by Lazard and the company by Rothschild.
The privatization, like that of Royal Mail in the U.K. two years ago, is politically contentious amid expectations of subsequent cost cutting and job losses.
A video clip taken by a postal worker last month went viral on YouTube in Italy showing government-appointed chief executive Francesco Caio, former head of aviation group Avio and former CEO of Cable & Wireless Communications in the U.K., heckled at a depot in Milan over his 1.2 million euro pay package.