Intesa May Delay IPO of Banca Fideuram Fund Unit as Market Discount Widens
Intesa is seeking to boost its Core Tier 1 ratio
Dave Yoder/Bloomberg
The Intesa SanPaolo SpA headquarters stand in Milan.
The Intesa SanPaolo SpA headquarters stand in Milan. Photographer: Dave Yoder/Bloomberg
Intesa Sanpaolo SpA, Italy’s second- biggest bank, may be forced to delay an initial public offering of its Banca Fideuram SpA asset-management unit as market swings prompt investors to seek discounts on new stocks.
Intesa may have to sell the shares at a price that values Fideuram below the 2.6 billion-euro ($3.2 billion) book value in its 2009 annual report, said fund managers Angelo Manca of Ockham Capital Partners in London and Alessandro Frigerio of RMJ Sgr in Milan. Intesa’s board meets tomorrow in Milan to decide on the Fideuram IPO, which would be the biggest since 2006.
“Intesa has little choice on Fideuram because market conditions have worsened dramatically in the last few months,” Manca said. “Prices have come down and Intesa would have to risk selling for less than the unit’s book value.”
The delay may threaten Intesa Chief Executive Officer Corrado Passera’s plan to strengthen capital this year by shedding so-called non-strategic assets. The 11 percent drop in Italy’s benchmark FTSE MIB Index through June 18 has already caused the postponement of share sales by KOS SpA and Moby SpA. European stocks have declined this year on concern economic growth may stall as governments cut budget deficits to combat the sovereign debt crisis.
‘Fluctuations’
At least 34 companies worldwide have postponed or withdrawn IPOs since the beginning of May as the European debt crisis sent the Standard & Poor’s 500 Index down as much as 14 percent from its 2010 high.
“Market fluctuations” may affect the timing of the Fideuram IPO, Passera told reporters on June 11 in Venice. An Intesa spokeswoman said the bank had no additional comment on the matter.
After taking the company private in January 2007 in an offer that gave Fideuram a value of 4.9 billion euros, Milan- based Intesa aims to bring it back to the stock market by selling at least 50 percent. Italy’s FTSE MIB has lost half of its value in the same period.
Fideuram, whose 4,300 private bankers advise clients on stock and bond investments, specializes in individuals’ savings. The Rome-based company holds 70 billion euros of assets, ranking No. 1 in Italy.
Banca Generali SpA, which trades at 14.6 times 2010 earnings estimated by analysts, is considered a peer of Fideuram. Based on Banca Generali’s trading multiple, Fideuram would be valued at 2.9 billion euros, using forecasts for the asset manager’s 2010 earnings of 200 million euros.
Mediolanum SpA and Azimut Holding SpA also are also considered benchmarks for asset-management companies in Italy. They trade at 12.7 times and 10.5 times earnings, respectively.
‘Capital Loss’
“Selling below book value would lead to a capital loss and would boost ratios by less than they expected,” said Aldo Comi, a London-based analyst at Keefe, Bruyette & Woods.
Intesa is seeking to boost its Core Tier 1 ratio, a measure of the bank’s ability to absorb losses, by at least 50 basis points, said Comi, who has an “outperform” recommendation on Intesa. Intesa would have to place a valuation on Fideuram of 3.3 billion euros in order to boost the ratio by 60 basis points, he said.
As part of the IPO, Intesa is in talks to sell part of Fideuram to private-equity firm Hellman & Friedman LLC. An official of San Francisco-based Hellman declined to comment on the status of their negotiations.
Fideuram’s first-quarter net income rose 30 percent to 63.5 million euros. The company runs 100 branches and has more than 630,000 customers.
Fideuram’s IPO would be the largest in Italy since oil refiner Saras SpA sold 2.1 billion euros of shares five years ago. Enel SpA, Italy’s largest utility, plans an initial public offering of its Green Power unit in October.
To contact the reporters on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net; Sonia Sirletti in Milan at sirletti@bloomberg.net
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