* The government promised 44 billion euros in funds to support the core industry
* The authorities want the country’s lenders to buy the Milan stock exchange from the LSE
* Under EU rules, new equity funds will not drive Italy’s deficit
By Giuseppe Fonte
ROME, May 21 (Reuters) – The Italian Ministry of Finance plans to create a new 44 billion euro fund with initial resources of at least 4 billion euros to buy shares in the country’s strategic company, two political sources told Reuters.
Italy’s main industries have been hit hard by lockouts to try to curb one of the worst coronavirus outbreaks in the world and Rome wants to defend them from potential foreign predators.
For this purpose, new funds will be able to invest in Italian non-financial companies with revenues of more than 50 million euros ($ 54.89 million), the government’s latest stimulus decision, which was launched this week, said. The funds will be managed by state lender Cassa Depositi e Prestiti (CDP).
“The Ministry of Finance will fund CDP in several parts. The first is worth 4 or 5 billion euros, “said a senior government official, asking not to be named because of the sensitivity of the issue.
The formation of the fund has prompted the 5-Star Movement in the ruling coalition in Italy to renew the push for its proposal to use CDP to buy back the Milan stock exchange from the London Stock Exchange, a party source said.
His coalition partner, the center-left Democratic Party, has calmed down with the idea.
Speculation about LSE plans for Italian business has grown since it was announced last year that they plan to buy Refinitiv, where Thomson Reuters holds a 45% stake.
The Ministry of Finance said it would set up new equity funds with up to 44 billion euros in special bonds.
“CDP can use this instrument as a guarantee to increase liquidity in the market”, said a government official.
In exchange, the Ministry of Finance will receive units in the funds. Under European accounting rules, such financial ownership does not affect the country’s budget deficit.
The government’s stimulus decree also authorizes CDP to increase the resilience of equity funds by selling state-guaranteed bonds to private investors.
The decision said CDP could, through equity funds, invest in strategic industries and critical supply chains.
$ 1 = 0.9109 euros
Reporting by Giuseppe Fonte, edited by Gavin Jones and Jane
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