Identifier
Created
Classification
Origin
06MILAN77
2006-03-06 15:13:00
UNCLASSIFIED
Consulate Milan
Cable title:  

Good prospects for Italy's Stock Market

Tags:  EFIN EINV ECON IT EUN 
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061513Z Mar 06
UNCLAS SECTION 01 OF 02 MILAN 000077 

SIPDIS

TREAS FOR HULL
STATE PASS CEA
USDOC 4212/ITA/MAC/OEURA/CPD/DDEFALCO


E.O. 12958: N/A
TAGS: EFIN EINV ECON IT EUN
SUBJECT: Good prospects for Italy's Stock Market

REF: Rome 449

Increase in Request for New Listings
------------------------------------

UNCLAS SECTION 01 OF 02 MILAN 000077

SIPDIS

TREAS FOR HULL
STATE PASS CEA
USDOC 4212/ITA/MAC/OEURA/CPD/DDEFALCO


E.O. 12958: N/A
TAGS: EFIN EINV ECON IT EUN
SUBJECT: Good prospects for Italy's Stock Market

REF: Rome 449

Increase in Request for New Listings
--------------


1. Data from February indicates that 2006 will see an
increase in new listings for the Italian stock market
(Borsa Italiana) over 2005. The Borsa saw 19 new
listings last year, already the highest number of new
listings since 2000. This included 15 IPOs and 4
spin-offs, incorporations, or re-listings of existing
floating capital (Parmalat). So far this year 24
companies have requested CONSOB, Italy's SEC
equivalent, to authorize their listing. The majority
of these are small and mid cap companies from a
diverse range of sectors including oil (API and
Saras),food (Valsoia),jewelry (Stroili Oro),
scooters (Piaggio) and ceramic tiles (Marrazzi).


2. The Borsa currently has a total of 282 listed
companies with a market capitalization of 681 billion
euros -- equivalent to approximately 50 percent of
Italy's GDP. In 2005 Borsa Italiana ranked third in
Europe with a record trading volume of 2,000 billion
euros. While it is still too early to tell if all 24
companies will actually complete the listing process,
the increasing numbers reveal a positive potential for
growth in the Italian equity market. We believe the
increase in listings is a combination of stronger
capital market conditions and recent performance
combined with the beginnings of a cultural shift that
seems to see Italian businessmen becoming less
reluctant to list family-owned companies in the face
of need for growth capital in order to remain
competitive in an increasingly global market. Public
listing has also turned out to be a viable option for
some first or second-generation entrepreneurs facing
succession problems due to lack of an apparent family
heir. (Note: Listings in 2005 were all
oversubscribed.)

Potential Changes in Borsa's Future
--------------


3. Even the Borsa Italiana itself, currently
controlled by a group of Italian and foreign banks,
may be joining the list of future IPOs. The move was
made easier following Parliament's recent passage of
an oversight law (legge sul risparmio) through
increased transparency, improved corporate governance
and stronger rules preventing conflicts of interest
(reftel). Borsa Executive Director Massimo Capuano
has been championing the idea as a way to facilitate
the Milan Stock Exchange joining any eventual
consolidation of European exchanges. Capuano first
moved Borsa Italiana in this direction in 2005 by
joining "Euronext," an arrangement under which a
number of European exchanges, including Paris,
Amsterdam, Brussels and Lisbon, have agreed to have a
single market for trading government issued bonds.
Capuano fiercely defends the Borsa's potential to be
an international player in the European scene, but
recognizes that it will first be required to go public
before it is allowed to purchase another stock
exchange (as other major stock exchanges have done in
Europe in recent years).

Looking to Attract US Investors
--------------


4. We recently met with Capuano to discuss the Borsa
Italiana's upcoming plans to host a conference in New
York in early April introducing approximate 30 of
Italy's largest publicly traded companies to American
investors. The Borsa will host a similar conference
featuring several small and mid-cap companies in late
May. While the Borsa has previously organized similar
events in New York and Boston, Capuano suggested that
he is particularly interested in expanding the
outreach to other major cities on the West Coast, in
particular to California. He has requested our
assistance in helping to provide key contacts in the
California financial market, with whom the Borsa might
begin exploring the possibility of arranging a future
event. Consulate Milan is coordinating a response to
the request with Embassy Rome in the context of
Mission Italy's "Partnership for Growth" project.

DGraze