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Poste Italiane Privatisation

Italy is going to sell up to 40 per cent stake in Poste Italiane, Italy’s national postal service. The partial sale of Poste italiane is the biggest privatisation from the 90's, when stakes in groups including Eni and Enel were sold to investors, and it will raise a maximum of €3.9bn in proceeds.

Poste Italiane reaches millions of Italian households and is a key selling point for the IPO. It represents a very large privatisation by Italian standards and opens up to a different economic policy.

 

Poste Italiane is a 153-year old giant, it generates €28.5bn in annual group revenue, and holds €420bn in postal savings deposits, with 32m customers. The IPO is due to have a price range of €6 to €7.5 a share, giving the company an equity value of up to €9.8bn. As emerging markets led by China compete with slowing economies, low asset prices represent for Italy an opportunity to lure some investors. 

 

The Renzi government regards the share sale as a central part of a €12bn privatisation programme but it has been commented that the IPO proceeds will make a limited contribution to Italy’s debt reduction plans.

 

Because of the recent reforms to retirement benefits that means people will have to rely less on state pensions in the future, Italians are encouraged to move their money out of government bonds and into areas offering higher returns.

Asset management is an important expanding area of Poste Italiane, together with mobile banking and remittances, an increasing activity that reflects the rising migrant population in Italy. These areas developed because of the decline in the letter business caused by email, and the rise of e-commerce, as Amazon now leads the market bringing new competitors in parcel delivery.

 

More than with workforce reductions, the restructuring of the Postal service will take place thanks to the gradual shift of personnel from more traditional business areas (mail delivery) to next-generation services such as the sale of financial and insurance products. 

 

Questions have been raised about Poste Italiane’s hybrid business model spanning logistics, savings and asset management.

 

After the IPO of 40% of the capital, Poste italiane will keep its

non-contestable status, and 60% of the capital will be safe in the hands of the state. With this arrangement, therefore, the majority shareholder in the public, and private minority shareholders will have a vested interest in maintaining the status quo, that is, to ensure that the Italian Postal service will continue to make profits, also benefiting from state support and logics that have little to do with the market economy. According to some economists the Italian postal sector would indeed need greater deregulation, especially for the international service of correspondence which is now in exclusive concession to the company led by Massimo Sarmi, ex CEO of Poste Italiane, and that, instead, could be liberalized, perhaps with different public local tenders.

Giulia Lombardo

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