Italian post office sell-off to raise more than 3 billion euros

By Giuseppe Fonte and Francesca Landini

ROME/MILAN (Reuters) - Italy will raise nearly 3.4 billion euros ($3.8 billion) from the sale of a minority stake in its post office in a stock market listing welcomed by the government as a vote of confidence for its business reforms.

The sale of up to 38 percent of Poste Italiane is the biggest privatisation in a decade in the euro zone's third-largest economy. Demand from investors bodes well for Prime Minister Matteo Renzi's efforts to revive state assets sales and reform creaky institutions.

"The deal has been a success, drawing requests of more than three times the amount on offer ... and attracting both big and small investors from around the world," Economy Minister Pier Carlo Padoan told a news conference on Friday.

Padoan said the Treasury had priced shares in Poste Italiane at 6.75 euros each, in line with what sources told Reuters on Thursday and at the mid-point of an initial price range of between 6.0 and 7.5 euros per share.

The final price values the entire company at 8.8 billion euros and implies an estimated dividend yield of 5 percent.

"The deal confirms investor confidence in the company and in the country," Padoan said, adding proceeds from the sale would be used to trim Italy's 2.2 trillion euro debt.

U.S. investment firms BlackRock and Fidelity,as well as China's State Administration of Foreign Exchange (SAFE), have bought shares in the post office, a source close to the matter said, in a sign of interest from foreign buyers.

Poste Italiane's IPO paves the way for the planned sale of state-owned air traffic controller Enav and state railway group Ferrovie dello Stato, Padoan said.

Italy has a target of 7 billion euros in privatisation revenues this year and 8 billion euros the next.

POSTAL PRIVATISATIONS

Poste Italiane is widely regarded as a proxy for the country as its 142,000 workers makes it Italy's biggest employer and it holds more than 100 billion euros in domestic government bonds.

Dating back to before the creation of the Italian state, the group has turned into a conglomerate that last year reaped 85 percent of its 28.5 billion euro revenues from insurance and financial businesses. The loss-making mail and parcel division only accounted for 15 percent.

To get the most value from the share sale, Italy put the whole group on the block, while the British government split off Royal Mail's insurance and banking division before listing the postal service two year ago.

Japan Post has chosen a different path and will list its bank, insurance and parent divisions separately in a triple IPO due to take place on Nov. 4.

"Italy has done the right thing in listing the whole business ... integration is the key for the future of the group," Ifigest's asset manager Roberto Lottici said.

The first test for Poste Italiane will be its debut on the Milan stock exchange on Tuesday.

The treasury will remain its top shareholder with a stake of more than 60 percent.

To have widespread feedback on investors' reception of the offering, Italy hired 10 banks to arrange the IPO. Bank of America Merrill Lynch, Citigroup, Intesa Sanpaolo, Mediobanca and UniCredit were global coordinators and Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley and UBS acted as bookrunners.

(Additional reporting by Elisa Anzolin, Danilo Masoni in Milan; Editing by Keith Weir)