Condotte, Italy's third-largest construction group, was placed under extraordinary administration last year as it risked buckling under more than 800 million euros in debt.

The European Commission gave a green light last month to a 190 million euro (165 million pounds) state guarantee to meet urgent liquidity needs at the building group.

"We've signalled a strong interest," Passera said on the sidelines of a conference in Milan, adding he had contacts with the company's special commissioners.

Passera, a veteran banker who set up Illimity to invest in distressed businesses and finance small firms, said he saw a possibility to relaunch at least part of Condotte so that it could take part in the sector's consolidation in Italy.

Italy's building industry has been hit by work cancellations and delays around the world, with major players struggling.

Astaldi, a major contractor with more than 10,500 employees, filed for court protection in September after delays to a bridge deal in Turkey.

Il Sole 24 Ore daily reported on Tuesday, that Illimity was teaming up with funds Oxy Capital and Highbridge Capital to draw up a turnaround plan for Condotte. This would replace one currently under consideration by Condotte's commissioners, which envisages a possible bridge loan from creditors, the report said.

Illimity was created from the combination of special purpose acquisition company SPAXS and Banca Interprovinciale.

(Reporting by Luca Trogni, writing by Giulio Piovaccari. Editing by Jane Merriman)