Veneto Banca Says Atlante to Back IPO as Investors Spurn Sale

Veneto Banca SpA, which needs to raise 1 billion euros ($1.1 billion) to ensure its survival, said the Italy-orchestrated bailout fund Atlante has guaranteed it will buy any leftover stock as investors spurn the initial public offering.

The bank, based outside Treviso, Italy, said it will offer shares at 10 euro cents to 50 cents apiece in a sale that will begin June 8, according to an e-mailed statement on Tuesday. The range isn’t in line with market practice because of weak demand, the bank said.

The company is among troubled Italian lenders struggling to boost their capital reserves to a level demanded by the European Central Bank. Investors last month balked at Banca Popolare di Vicenza SpA’s 1.8 billion-euro IPO, forcing Atlante to take control of the lender.

Atlante pledged to buy all unsold stock as long as it gets a controlling stake of at least 50.1 percent of Veneto Banca.

A sale would give Veneto Banca a market valuation equal to about 35 percent of its tangible book value, making it more expensive than other Italian banks including Banco Popolare SC, Banca Carige SpA and Banca Monte dei Paschi di Siena SpA, according to calculations by Bloomberg. Investors typically seek to buy stock at a discount to peers when a company sells shares for the first time.

“The bank’s implied valuation is financial nonsense,” said Fabrizio Bernardi, an analyst at Fidentiis Equities. “The bank is too expensive considering its risk profile.”

Carlo Messina, chief executive officer of Intesa Sanpaolo SpA, the global coordinator and guarantor of the IPO, earlier in May said that Atlante could also take over Veneto Banca if the Italian regional lender were to fail in attracting investor demand.

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