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Italy moves ahead on Poste stake sale in revenue hunt

The logo of Poste Italiane is seen in Rome

By Giuseppe Fonte and Valentina Za

ROME (Reuters) -Italy has approved a decree to sell a stake in postal service Poste Italiane as the government works to raise cash to bolster public finances, Prime Minister Giorgia Meloni's office said late on Thursday.

Debt-laden Italy has plans to raise roughly 20 billion euros ($22 billion) from asset sales between 2024 and 2026 to keep in check the euro zone's second-largest debt burden in relation to gross domestic product (GDP).

"We need to maintain control of Poste, so we can't go below 35% of its capital," Economy Minister Giancarlo Giorgetti said on the sidelines of an event on Friday.

The Treasury will sell all or part of its 29.3% direct stake in Poste, while holding onto another 35% held through state investor Cassa Depositi e Prestiti (CDP).

The cabinet office did not provide details on how it wants to proceed, saying in a statement it would "tend to favour a widespread shareholder base and the stability of the ownership structure".

A government official said Italy was yet to decide the way forward - whether to launch a public subscription offer or place the shares through an accelerated bookbuilding procedure.

Italian governments have a long record of missed privatisation targets, with yearly proceeds from sales of public assets averaging less than 0.1% of GDP, according to central bank data.

FINANCIAL CONGLOMERATE

Disposals have taken fresh prominence in Italy as the period of expansionary fiscal policy triggered by the COVID-19 pandemic is set to end next year, when the European Union will adopt stricter budget rules under the reform of its Stability and Growth Pact.

Factoring in proceeds from asset sales, Italy's debt is seen edging down by just 0.6 percentage points between 2023 and 2026, when it is targeted at 139.6% of GDP.

Italy raised 3.1 billion euros in 2015 selling a 35% Poste stake in an initial public offering that valued the group at 8.8 billion euros. Poste is now worth 13.5 billion euros.

The group, which will present its new industrial plan in March, is a financial conglomerate that has expanded beyond its core business into payments, mobile phone services and energy supply, as well as insurance and investment products.

Analysts see Poste's steady dividend flow as a strong point for the group, though they flag the potential political interference stemming from the government's controlling stake.

Among shadows in the group's recent history, Poste is a major victim of frauds Italy suffered over tax incentives it provided in 2020-2021 to renovate buildings and improve their energy efficiency.

After acquiring billions of tax credits without hiring audit firms to carry out checks on the assets like major banks did, Poste was forced to set aside 320 million euros to cover potential losses as prosecutors froze credits that turned out to stem from fake invoices.

The seizures at present stop the state from reimbursing the tax credits Poste has acquired.

($1 = 0.9229 euro)

(Editing by Jonathan Oatis and Mark Potter)