Reuters - Hot Stocks

UPDATE 1-Shares in Poste Italiane hover around IPO price in market debut

(Adds comment, comparison with Royal Mail, Japan Post)

By Francesca Landini

Oct 27 (Reuters) – Shares in Poste Italiane pared initial modest gains to trade flat on their debut on the Milan stock exchange on Tuesday after the government sold a minority stake in an initial public offering.

Prime Minister Matteo Renzi’s government is keen for the stock to perform well and reward investors as it prepares to list more state-owned companies next year in an effort to cut debt and reform Italy’s hidebound economy.

At 0920 GMT, Poste Italiane, Italy’s national post office, was trading at 6.75 euros, the final price IPO set by the treasury, and in line with a flat Italy’s main stock index.

“We have seen a bit of profit taking on the stock, but you have to wait until the end of the first day of trading to have a clear view,” a Milan-based trader said.

The muted start of Poste Italiane compares with a 38 percent rise recorded by shares in Royal Mail on their debut two years ago, in a move that triggered a fierce debate on whether the British group had been priced too low.

The disposal of up to 38 percent in Poste was Italy’s biggest state sale in a decade and will allow the Treasury to pocket up to 3.4 billion euros to trim its public debt.

DIVIDEND YIELD

The Treasury priced Poste’s stock at the mid-point of an initial price range of between 6.0 and 7.5 euros a share, in a move to ensure an attractive return on investment in the group, analysts and bankers said.

“At the current price, Poste has a dividend yield of nearly 5 percent. This was one of the reasons why investors bought into the group” said Stefania Godoli, head of Equity Capital Markets at UniCredit, one of the global coordinator of the deal.

U.S. and British investors were also interested in the deal since it gave them an opportunity to bet on the economic recovery expected in the euro zone third-largest economy, Godoli said.

The flotation puts under market scrutiny the 153-year-old giant that last year derived 85 percent of its 28.5 billion euro revenues from financial and insurance businesses. Its loss-making mail and parcel division accounted for only 15 percent.

In another closely-watched privatisation, Japan Post will list its bank, insurance and parent divisions separately in a triple IPO on Nov. 4.

Intesa SanPaolo, Bank of America-Merrill Lynch, Citigroup and Mediobanca were global coordinators for the share sale of Poste Italiane together with UniCredit. Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley and UBS acted as book runners. (Additional reporting by Valentina Za and Elisa Anzolin; Editing by Crispian Balmer)


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