Atlantia exit highlights Milan’s battle to retain market heavyweights

  • Atlantia will be delisted after redemption
  • Many Italian companies avoid the stock market
  • The authorities are trying to improve the situation of Borsa Italiana

MILAN, Nov 25 (Reuters) – A buyout by Atlantia ( ATL.MI ) will shave another 19 billion euros ($19.5 billion) off the value of Milan’s bourse and bring to 12 the number of companies set to leave the bourse this year, raising concerns about its condition.

Lawmakers and regulators want to reverse the trend and strengthen the role of the 200-year-old Borsa Italiana at the heart of Italian business.

Barbara Lunghi, head of the Italian division of stock listings at market owner Euronext, says that having a listed company and the presence of outside investors encourages companies to innovate and grow.

“It gives companies additional equipment that helps drive growth,” Lunghi said.

But the problem runs deep, with many Italian family firms reluctant to give up control by listing their companies unless they need cash for M&A or other expansion strategies.

Market watchdog Consob this year approved measures to simplify approval procedures for IPO prospectuses, including allowing them to be submitted in English.

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Also seeking to speed up change, Italy this year began exploring how to overhaul its listing, voting and other rules to address problems hampering the country’s capital markets, although that process was frozen by a change in government after a right-wing coalition victory. elections at the end of September.

EXODUS OF MILAN

So far this year, 11 companies have left Euronext Milan, including the Agnelli family’s holding company Exor ( EXOR.AS ), which moved to the Amsterdam stock exchange as a legal domicile.

Roads and airport operator Atlantia is exiting after the Benetton family bought out and Blackstone breached the 90% support threshold on Thursday.

Travel catering company Autogrill ( AGL.MI ) is expected to be delisted following a merger with Swiss company Dufry, and the fate of shoemaker Tod’s ( TOD.MI ) remains uncertain after a buyout bid by its main shareholder failed.

CNH Industrial ( CNHI.MI ), whose shares are listed in both Milan and New York, is also considering ending its dual listing and focusing on the NYSE.

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The takeover of listed companies by the private sector is a broader trend shared by many European exchanges, as low prices and the availability of cheap money made it convenient.

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LITTLE YOUNG FEET

On the plus side, four companies joined the main Euronext Milan market this year, including truck maker Iveco ( IVG.MI ), which was the result of a spin-off. Two other companies have been upgraded from the smaller Euronext Growth Milan.

The situation is healthier for the Euronext Growth Milan market itself, which is designed for small and medium-sized companies with minimal access requirements. It had 18 new listings in 2022, but the overall market cap is very low.

The lack of Italian IPOs is a perennial problem.

Over the past 20 years, the main market has lost 268 listed companies and gained just 185, according to Intermonte research published in March. In contrast, the less regulated SME market has attracted 263 listed companies and experienced 68 delistings.

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A QUESTION OF CULTURE

The fact that there are relatively few listed companies is rooted in the country’s history, said Andrea Beltrati, professor of political economy at Milan’s Bocconi University.

Beltratti said Italy lacks a long tradition of equity financing and its economy has been relatively weak for the past 20 years.

The large presence of banks and other financial intermediaries in Italy has replaced the role of markets, so companies often preferred to ask them for financing.

“The benefits of being listed are the ease of raising capital and the reputational (position), but there are also costs related to regulation, the need for transparency and the many interactions with investors,” Beltratti said.

“I don’t think these are issues that can be resolved in months or even years because it’s a cultural issue,” Beltrati added. ($1 = 0.9755 euros)

Reported by Elisa Anzoliņa; Graphics by Danilo Masoni; Edited by Keith Weir and David Holmes

Our Standards: The Thomson Reuters Trust Principles.

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