According to sources familiar with the matter and as reported by Bloomberg, the Italian government is targeting Ferrovie dello Stato Italiane.
De Vanna, Ersel: “The dividends guaranteed by these investments are much higher than the ten-year yields on Italian government bonds (Btp), so the divestment would erode value for the country.”
The coalition led by Prime Minister Giorgia Meloni is reportedly exploring the possibility of selling minority shares in some state-owned companies to boost the Italian economy. According to sources familiar with the matter, as reported by Bloomberg, Ferrovie dello Stato Italiane is among the targeted entities. Additionally, ministers are counting on the expected cash flow from the sale of a stake in Mps, which is expected to materialize in 2024. During a Monday cabinet meeting, as reported by Bloomberg, Meloni emphasized the need to reduce expenses to support the government’s plan to cut taxes on salaries and assist struggling families. Giancarlo Giorgetti, the Minister of Economy and Finance, later stated that “disinvesting from certain activities could be a good idea.” However, if implemented, this move could trigger alarm bells in financial markets.
“I believe Meloni was referring to the stake in Banca Monte dei Paschi, which is worth approximately 2 billion and does not pay any dividends,” explains Carlo De Vanna, Senior Fund Manager at Ersel Asset Management. “Italy has also committed to returning it to private ownership as soon as possible, perhaps by merging it with another institution. We should not exclude that Meloni was also referring to a portion of the Poste shareholding, exceeding 25%, which is worth around 5 billion, while Enav and Fincantieri are probably too small,” adds the expert.
What It Means for Financial Markets
“Assuming that, in principle, the sale of public stakes should finance investments rather than current spending, and that it makes sense only if the cost of debt is higher than the yield guaranteed by these investments, in the case of Italian public stakes, with a few exceptions, the dividends guaranteed by these investments are much higher than the ten-year yields on Italian government bonds (Btp). Therefore, the divestment would erode value for the country,” observes De Vanna. Looking at the stock market, according to the manager, a potential sale of a portion of Poste would have no impact “because it would still remain firmly in the hands of the state.” The situation is different for Montepaschi, as it would reopen banking risk and likely lead to further consolidation operations.
Other Government Moves to Monitor
At the beginning of the month, the government surprised the markets with the introduction of a mega-tax on bank windfall profits, causing a wave of declines that sank the sector’s stocks on August 8th. “The government is clearly looking for resources for the budget, primarily in sectors that have benefited during the last inflationary phase. The idea of taxing bank windfall profits, although somewhat scaled down, is clear evidence of this,” continues De Vanna. He adds that the oil and renewable energy sectors remain in focus, even though it’s challenging to find a way to retroactively tax them. “They could also tighten the fight against tax evasion by companies operating in Italy but headquartered abroad,” says the expert. He concludes, “Looking at proactive government operations, the situation of Telecom should definitely be monitored, where Cdp (Cassa Depositi e Prestiti) could invest new public resources to have a leading role in governance and network development.”
