The Italian railway is about to launch a search for financial advisors to work with it and set a value on the group as anticipated in the government’s privatization program.
The company led by Renato Mazzoncini is currently drawing up the list of investment banks it could call on in this first phase of the process. When the list is complete, it will send letters within a week or two to a group of institutions (including Lazard, Rothschild, Banca Leonardo, Equita Sim to name a few) with the goal of choosing its consultants by the end of February.
How will the privatization proceed?
“We are looking at different options,” Fabrizio Pagani, head of the office of the Minister of Economy and Finance, told ItalyEurope24. “It’s very much a strategic operation, to strengthen the company and allow it to compete successfully in the newly liberalized European transport market.”
Pagani himself led the joint ministerial task force charged with evaluating various options for privatizing the Railway (from a public stock listing to a spinoff of Trenitalia). The path deemed most interesting thus far is a public listing of the long-haul passenger service.
Mazzoncini outlined the basics of the strategy when he presented the Railway’s strategic plan in late September: it would be a public listing of a part of the service, that is, a split of Trenitalia, which includes the Frecce and Intercity divisions, without including regional transport. Financial advisors will help hash out the precise details of the plan, including stakes that will be allocated to institutional and retail investors. Back in September, Mazzoncini had only indicated a floor, of no less than 30%, to be put on the market. He didn’t address the potential proceeds from the operation but, using 30% as a guide, some analysts have valued it at €1.2-€1.3 billion.
The group also needs to clarify the vehicle that would be used for the public listing.
Mazzoncini noted recently that, “In fact, the outlines are already rather clear so that it won’t be a very complicated process. The timeframe calls for the creation of the ‘newco’ by June-July.”
The goals is to conclude the entire process by the ned of 2017.
But it’s clear that the markets will be a factor, as will the result of Parliamentary debate over possible elections. At the moment there’s great uncertainty over when Italy will go to the polls: officially, the next election wouldn’t be until 2018 but politicians are split on whether to hold them early. If that ends up happening, the government and the Railway may be forced to change their plans.
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