Italy

KKR throws autos shareholders into a spin

22 October 2018

The buyout group is paying $7.1 billion for a Fiat Chrysler-owned supplier. The double-digit earnings multiple is a coup for new FCA CEO Mike Manley. The big premium to where the industry trades needs some justifying. But regular investors may also be too gloomy about the sector.

Italy tries risky EU gamble on budget

19 October 2018

The radical government wants to boost spending despite Brussels’ opposition. Lengthy procedures mean the spat will drag on until European Parliament elections in May. With radical parties gaining ground, the new Commission could be more lenient. But markets won’t wait that long.

Telecom Italia’s discount is only partly deserved

17 October 2018

A costly spectrum auction and woes in Brazil have driven the telco’s stock near historic lows. Squabbling investors and Italian political worries are also a concern. But if TIM can contain rival Iliad’s assault at home, its discount to European peers looks too steep.

Italy tries more state medicine to heal Alitalia

12 October 2018

The radical government wants the finance ministry and local railways to support a 2 bln euro rescue for the ailing airline. State involvement may scare off potential international partners and make it harder to cut costs. Taxpayers would once again bear the costs of failure.

Bank woes put Italy’s radicals on the spot

11 October 2018

Worsening investor sentiment caused by the new government’s fiscal binge is hurting the country’s banks. The weakest ones, like Carige, need capital, but may struggle to raise it. Either rescuing a bank or shutting it down would be politically toxic.

Italy botches useful fiscal boost

5 October 2018

The radical government wants to ramp up spending in defiance of Europe’s fiscal rules. The country could use a stimulus but the case is being undermined by rosy growth forecasts and inflammatory rhetoric from Rome. That spells more tensions with Brussels and bond markets.

Italy’s 5G auction is an $8 billion smash-and-grab

3 October 2018

The cash-strapped country raised more money than expected thanks to the canny way it sold mobile spectrum. The consequences are for others. If operators raise prices, it’s effectively a stealth tax. If they can’t, there will be less cash to build new networks in Europe.

Fiat car-parts sale needs private equity mechanics

3 October 2018

The carmaker may spin off or sell its Magneti Marelli unit. Handing it to shareholders would let them keep any upside. But the outlook for parts makers is mixed, and valuations low. Selling to the likes of KKR makes more sense, even if CEO Mike Manley has to accept a price cut.

Italy budget gives with one hand, takes with other

1 October 2018

The new government has chosen to fight stuttering growth with tax cuts and a “citizens’ income”. Ditching austerity may boost sentiment and lift consumer spending in the short term. But the plan lacks a credible strategy to fight youth unemployment which is over 30 pct.

Italy throws down debt gauntlet to EU and markets

27 September 2018

Rome is casting aside fiscal restraint by setting a deficit target of 2.4 pct of GDP through 2021. Such laxity risks swelling the euro area’s second-worst national debt. Political realities may restrain the EU Commission from holding the line. But investors may not be so kind.

Bolloré’s exit leaves Mediobanca exposed

27 September 2018

The French financier is ditching a shareholder pact that has long pulled the strings at Italy’s most influential investment bank. CEO Alberto Nagel, who has turned the bank around, gets a freer hand. But if the pact is not renewed, Mediobanca could more easily become a target.

Versace gives Blackstone a suitably flash exit

24 September 2018

Fashion group Michael Kors may pay 2 billion euros for the Italian label. The deal adds a high-profile name to CEO John Idol’s growing stable of luxury brands, but may take years to pay off. Minority investor Blackstone has stitched together a clean sale, and respectable return.

Mega-vendetta can’t square Italy’s budget circle

24 September 2018

A government spokesman has threatened a purge at the Treasury unless it finds the cash to pay for costly welfare handouts. Blaming the deep state won’t help. Global investors will stomach a bigger deficit only if Italy’s debt remains stable. Voters are in for a disappointment.

Starbucks’ Italy push may help it more at home

19 September 2018

The $74 bln coffee giant unveiled a massive espresso emporium in the centre of Milan. It sounds like the equivalent of carrying coals to Newcastle. But there may be some logic here if the buzz created around the Italian launch gives a jolt to flagging sales in America and beyond.

New Ferrari boss needs to prove green credentials

18 September 2018

Louis Camilleri fixed an initial blunder by reaffirming the targets of predecessor Sergio Marchionne. He also wants to sell more eco-friendly cars. Yet the goals look ambitious, and Ferrari is in the slow lane on hybrids. A late move into sports utility vehicles doesn’t help.

Regulator’s exit throws Italy fresh market test

14 September 2018

The head of the country’s financial watchdog resigned after ruling parties criticised his continuing ties with the European Commission. Mario Nava was appointed by the previous government. His replacement will face a challenge to dispel doubts of political meddling.

Ilva deal gives Italian business much-needed hope

7 September 2018

Rome has dropped its opposition to ArcelorMittal’s 4 bln euro swoop on Europe’s biggest steelworks. Scrapping Ilva would have been a victory for ideology over business logic and common sense. It’s an encouraging sign that the radical new government’s bark is less than its bite.

Vivendi gives Elliott a taste of activist medicine

6 September 2018

Telecom Italia is turning into the U.S. fund’s worst big investment in Europe. Vivendi, which used to run the telco and is its biggest investor, blames Elliott’s boardroom overhaul for the share price slump. Such squabbles distract from the problem of competition from new rivals.

Guest view: Italy’s autumn of discontent

4 September 2018

Market tensions are rising as the government prepares for negotiations with the European Union over the country’s budget for 2019. However, both Italy and the euro zone are better placed than before to cope with turmoil, writes Fabrizio Pagani of Muzinich & Co.

Foreign exodus to test Italy’s bond market buffers

31 August 2018

Fear of bold public spending is spooking foreign investors, making it harder for the government to fund itself. Italy can lean on banks and local savings to plug the gap. But gorging on debt hurts lenders and growth. And “Quitaly” concerns may lead Italians to move cash abroad.