By Giuseppe Fonte
Italy's Treasury plans to create a new 44 bln euro fund with initial resources of at least 4 billion euros to buy stakes in the country's strategic companies, two political sources told Reuters.
Italy's major industries have been hit hard by the lockdown to try to curb one of the world's worst coronavirus outbreaks and Rome wants to defend them from potential foreign predators.
To this end, the new fund will be able to invest in non-financial Italian companies with revenues of more than 50 million euros ($54.89 million), the government's latest stimulus decree, unveiled this week, said. The fund will be managed by state lender Cassa Depositi e Prestiti (CDP).
"The Treasury will fund the CDP in several tranches. The first is worth 4 or 5 billion euros," a senior government official said, asking not to be named because of the sensitivity of the matter.
The creation of the fund has encouraged the 5-Star Movement in Italy's ruling coalition to renew a push for its proposal to use the CDP to buy back the Milan bourse from the London Stock Exchange, a party source said.
Its coalition partner, the centre-left Democratic Party, has been cool on the idea.
Speculation about the LSE's plans for its Italian business has grown since it announced last year that it planned to buy Refinitiv, in which Thomson Reuters holds a 45% stake.
The Treasury said it would set up the new equity fund with up to 44 billion euros in special bonds.
"CDP can use these instruments as collateral to raise liquidity on the market", the government official said.
In exchange, the Treasury will receive units in the fund. Under European accounting rules, such financial holdings have no impact on countries' budget deficits.
The government's stimulus decree also authorises the CDP to increase the firepower of the equity fund by selling state-guaranteed bonds to private investors.
The decree said the CDP can, via the equity fund, invest in strategic industries and critical supply chains.
(Reporting by Giuseppe Fonte, editing by Gavin Jones and Jane Merriman)