Italy Fund May Take Main Stake in Bank IPO as Investors Balk

  • Atlante expected to take up `vast majority' of capital raise
  • Institutional investors said to subscribe 5% to 10% of IPO

Italy’s government-orchestrated banking rescue fund will probably buy most of the shares in a planned 1.5 billion-euro ($1.7 billion) capital increase for Banca Popolare di Vicenza SpA, with institutional investors showing little interest, according to terms of the deal seen by Bloomberg.

Based on preliminary results, Atlante, the fund created to help the country’s troubled lenders, is expected to take up “the vast majority of the capital increase,” according to terms released before books closed Friday afternoon. The institutional book has seen “limited demand,” they said.

Institutional investors have offered to buy 5 percent to 10 percent in the initial public offering, according to preliminary calculations, said two people with knowledge of the matter, asking not to be identified because the details haven’t been published yet.

Popolare di Vicenza is seeking to tap investors to comply with a request from the European Central Bank, which warned that the lender could face bankruptcy proceedings without a capital increase. Atlante has already agreed to buy unsold shares in Pop. Vicenza’s initial public offering, replacing UniCredit SpA as guarantor.

‘Highly Unlikely’

The dearth of demand makes “a listing of the bank on the stock exchange highly unlikely at this point,” said Gianluca Ziglio, a strategist at Sunrise Brokers LLP, a derivatives dealer in London. “The lack of large foreign investors is particularly telling of the uncertainties surrounding the operation.”

Pricing and allocations of shares are expected to be confirmed Friday. The Italian stock exchange will decide whether there’s enough of a free float for the admission to listing on May 2, two days before the planned start of trading, according to the terms.

“Atlante has the financial resources to fully support Popolare di Vicenza’s capital increase,” Alessandro Penati, president of manager Quaestio, said at a conference in Milan Friday.

Popolare di Vicenza recorded 700 million euros to 800 million euros of outflows this year as clients withdrew deposits exceeding the threshold for compensation in the event of a resolution.

Italian banking shares fell in Milan trading, led by UniCredit dropping 5.3 percent. The lender is the third-worst performer on the 39-member Bloomberg Europe Banks and Financial Services Index this year, which has decreased 17 percent.

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