Investors Can't Get Enough of Italian Assets

  • Italy listings on path to reach highest level in over 10 years
  • 2018 expected to be another strong year with Valentino, Eataly

Initial public offerings are booming in Milan as investor demand for Italian assets is driving company listings to the highest level in at least a decade.

Pirelli & Co. SpA’s return to the market on Wednesday makes it the 30th company to join the Italian Stock Exchange this year, with as many as 12 others slated to start trading on the market by the end of the year, Raffaele Jerusalmi, chief executive officer of Borsa Italiana SpA, told reporters at the Pirelli event.

“2017 will be one of the best years ever for IPOs in Italy, in terms of number of companies that started trading,” Barbara Lunghi, head of primary markets at Borsa Italiana, said in an interview. “Companies seeking to list shares in Milan are increasing in a structural way and it looks like we’re at a turning point, with 2018 set to be another strong year.”

Fashion companies Valentino Fashion Group and Furla and Eataly, a supermarket and restaurant chain, may be in the pipeline for 2018.

Italian companies have raised 4.11 billion euros ($4.83 billion) from IPOs this year, more than double the 1.45 billion euros in 2016, according to Bloomberg data. European firms have raised about $39 billion from IPOs this year, up from $23 billion in the same period last year, according to the data.

Stefania Godoli, global head of equity capital markets at UniCredit SpA, cites several reasons for the IPO surge in Italy. They include better-than-expected economic growth, stabilization of the country’s banking system as well as companies forecasting higher profits.

"There is a renewed interest from Italian entrepreneurs to get listed as a way to renew the shareholder base and raise capital to expand the business," Godoli said.

Pirelli was Europe’s second-largest IPO this year, after the sale of a stake in Allied Irish Banks Plc in May that raised about 3 billion euros. The Italian tiremaker will end up raising 720 million euros less than the maximum amount targeted in the IPO, after narrowing the original price range. The stock fell as much as 3.4 percent in the first day of trading.

Gima TT SpA, a maker of packaging lines for cigarettes whose clients include Philip Morris International Inc. and British American Tobacco Plc, started trading in Milan on Monday, gaining 22 percent in its first session. The offering, open only to institutional investors, was eight times oversubscribed, an interest that “is comparable in recent years only to Moncler for the level and quality of demand generated,” said Stefano Rangone, Mediobanca SpA’s global head of equity capital markets. 

The FTSE MIB benchmark index is currently the best performing large stock exchange in Europe, up 17 percent year to date. The broader index has also benefited this year from the introduction of so-called PIR investment plans, aimed at boosting inflows into medium-sized and smaller companies by providing tax breaks for investments in funds that hold 70 percent of their assets in Italian stocks and bonds.

— With assistance by Ruth David, and Sonia Sirletti

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