Italy's Privatisation Efforts in the 1980s and 1990s

Vito Gamberale – Various examples of privatisations in Italy
VARIOUS EXAMPLES OF PRIVATISATIONS
IN ITALY
Vito Gamberale
Italiadecide – School for public policies
Rome, April 17, 2012

Table of contents
Privatisations of the 80’s Pg. 3
The Lanerossi case Pg. 6
The big privatisations of the 90’s Pg. 8
Manufacturing companies Pg. 11
Nuovo Pignone Pg. 12
ILVA Pg. 14
SME Pg. 16
Service and infrastructure companies Pg. 19
ENI Pg. 21
ENEL Pg. 23
Telecom Italia Pg. 26
SEAT Pagine Gialle Pg. 29
Autostrade Pg. 32
Aeroporti di Roma Pg. 34
Notes on privatisation in Europe Pg. 37
F2i as a privatisation tool of the local assets Pg. 44
Conclusions Pg. 60
2

3
Privatisations of the 80’s

4
 In the early 80’s, Italy’s business community was founded on 3 pillars:
 Big public groups, created with the nationalisation of the 30’s, which supported
Italy’s reconstruction and development after World War II and ensured the survival of
relevant industrial entities (e.g. the iron and steel sector, the building sector, the
energy sector, etc.).
These groups, which represented the government’s presence in the economy, gave birth
to a «mixed economy» pattern in Italy, one of the most advanced in the industrialised
world, with a particularly strong presence in the infrastructure and technological
manufacturing sectors.
 Big private companies, which often belonged to single families, and were born
before the war or at the time of the Italian «economic miracle».
 A high number of small to medium size companies, characterised by their
innovation approach and high-level efficiency.
 During the 80’s, the public presence in the economy was strongly questioned.
For the sake of the evolution of international markets (beginning of the
«globalisation»), of competition and apparent inefficiency, a campaign started –
sometimes with no real foundations – to dismantle public companies because of
the high costs of occasional recapitalisations, and because of the government’s
high debt.

This first privatisation phase concluded with contrasting results for the
government and often favoured big historical family groups, with no substantial
benefits for the market. 5
 A first phase of public presence reduction in the industry started, mainly led
by IRI:
 Among the most relevant operations of this
period, the following need mentioning:
 FIAT’s acquisition of Alfa Romeo (IRI) in 1986
 sale of the Lanerossi Group (ENI) to Marzotto
(probably the most successful case, see focus in the
following slide)
 …however, there were also some unsuccessful
cases:
 the ENIMONT case (company created through and
agreement between ENI and the Montedison private
Group) that resolved in the break-up of the agreement
and the restitution of all activities to ENI
 the SME case (food company owned by IRI), whose
first sale attempts were unsuccessful because of the
well-known legal arguments with political implications
that persisted for a long time.
OVERALL TOTAL 8,790Source: ISTAT
Size of the sales between 1986-1989 of the three main
management bodies IRI, ENI and EFIM (bil Lira)
Privste-owned shares in some companies of the IRI Group,
listed at the stock exchange (% data at year closing)
Company
Year
Source: IRI

6
 Lanerossi was founded in Schio (province of Vicenza) in 1873 by the Rossi family and was the biggest
Italian integrated-cycle woolen company (ranging from woolen to textiles to clothing) and one of the
biggest companies in Italy.
 The company produced woolen textiles for various usage: clothing, cloths, covers, yarns for hand-
knitting and industrial use.
 The production was located in various factories in the province of Vicenza, which included those of
Schio Piovene, Rocchette, Torrebelvicino, Pieve, Dueville, Marano Vicentino, Vicenza, Montorio.
 The company sold its products worldwide through a very extensive sales network in the USA, URSS,
Germany, Poland, South Africa, Canada, etc.
 After a critical phase (1955-1957), the company achieved excellent results under the management of
Giuseppe Eugenio Luraghi. In 1959 it achieved a turnover of 23 bil Lira, employing 10,000 people.
 In the early 60s, in part because of the stock exchange speculations that afflicted the company’s shares,
Lanerossi once again faced critical conditions and was purchased in 1962 by ENI in the framework of
a series of rescue operations of declining national companies.
 Through time, ENI created a textile group of relevant dimensions around Lanerossi (about 10,000
employees), which not only included the company from Vicenza but also other companies «rescued» by
ENI (Confezioni Monti, INTESA, Confezioni di Filottrano, MCM, etc.).
 In February 1986 ENI decided to privatise Lanerossi, following a strategy based on re-focusing on
the core business. The privatisation was accomplished in two steps: 1) eliminating a few declining
companies from the group (a total of 11 factories and 5,000 employees) and assigning them to a new
entity in the company, and 2) selling the industrially active part of the Lanerossi to private entities.
The Lanerossi case

7
 The main conditions from ENI on the acquisition of Lanerossi were:
 protection of the employment levels (about 3,000 employees in 1986)
 confirmation of the ongoing investments
 a certification that the dimensions of the acquiring company would be equal to Lanerossi’s.
 In 1986 Lanerossi’s balance sheet (with minor losses) indicated:
 turnover: 587 bil Lira
 net asset: 147 bil Lira
 NFP: 170 bil Lira
 ENI’s advisor in this operation, Paribas from France, selected four industrial groups: Marzotto,
Benetton-Inghirami, Bertrand Group and the French company Dolfuss Mieg.
 On July 22 1987, Marzotto offered the highest bid and acquired Lanerossi with 168 bil Lira (14%
premium on the net assets).
 Founded in 1836, Marzotto is a woolen company based in Valdagno (VI), led by Pietro Marzotto and
listed at the stock exchange. Its turnover in 1986 amounts to about 700 bil Lira, with a GTM of about
100 bil and debts of about 200 bil. In 1985 it acquired the Bassetti Group.
 Through this acquisition a Group with a 1,300 bil turnover was born, which accounted for a
10% share of the European woolen market.
This operation was considered a success both for ENI, whose profits were high through
a company on a constant downfall, and for Marzotto, who, thanks to operational
synergies, achieved the necessary dimensions to compete at a European level.
The Lanerossi case

8
The big privatisations of the 90’s

9
 During the 90’s, Italy was involved in important processes that forced the country
to radically change its economic policies:
 the political crisis, which started with the «tangentopoli scandal» and the
«defenestration» of an entire generation of public administration managers
 the economic decline: Italy’s GDP, after a decrease during the years of the
tangentopoli scandal (-0.8% in 1993), increased again but has since ranked constantly
below the European average
 the adoption of the Euro, which requires respecting the Maastrich parameters and,
therefore, accounting for the need to drastically reduce deficit, debt and inflation with
very strict financial actions
 the European Community urging a reduction of the public commitment in the
member states’ economies (Commissioner Van Miert will take advantage of Italy’s
particular weakness to only «push» this particular country).
 The following governments were forced to resort to any possible mean to
«cash in».
This forced the government to push for the privatisation process, which in
some cases was dominated by a characterised rush instead of potential
effectiveness.

10
The big privatisations in the 90’s
 The phase of big privatisations started in 1992, when the Amato Government
approved Law 359/92 (the so-called «state participations’ reorganisation
programme»), with the following binding objectives:
 to give value to participation for following business cession
 to list the participating companies at the stock exchange
 to promote a diffused share ownership
 to limit the dismissal of activities considered strategic for public entities
 to promote the growth of new institutional investors.
 Privatisations involved:
 manufacturing companies, which were often in decline (e.g. the iron and steel
sector) or were held by entities whose core business lied in other kinds of business
(e.g. ENI rescued many companies of various sectors in the previous decades)
 service and infrastructure companies (ENI, ENEL, Telecom, Autostrade, credit
institutions, etc.), which are likely to produce the highest profits.

11
 In the case of manufacturing companies, privatisation was accomplished mainly
through sales to private entities, usually following a competition process. Three
cases of this are:
 in 1994 Nuovo Pignone (initially a partial privatisation);
 in 1995 ILVA (full privatisation);
 from 1993 to 1996 SME (division between three groups – GS, Autogrill,
Cirio – and full privatisation)
Manufacturing companies

12
 The company, which produced iron as well as cast iron manholes and lamp posts, was founded in
Florence in 1842 by Pasquale Benini.
 After alterning positive and negative phases and production changes (from spark-ignition engines, to
weapons to textile looms), the company was on the verge of bankruptcy when it ENI acquired it in
1954.
 ENI focused the production mainly on machinery and tools for the oil and petrochemical industries, as
well as refineries, natural gas and power production industries. The company started to receive
important orders by third parties.
 In addition to the factories in Florence and in Massa, new ones were opened in Talamona (province of
Sondrio) in 1961, in Vibo Valentia in 1962, in Porto Recanati (province of Massa Carrara) in 1963, in
Schio (province of Vicenza) in 1968 and in Bari and Rome in 1972.
 In 1986, 18% of the assets were listed at the stock exchange in 4,250 Lira/sh.
 In September 1992, the Amato Government decided to give an explicit sign to privatisations, a
subject that had been discussed at great length. In the new phase of government asset release, the first
companies to undergo privatisation were Nuovo Pignone (owned by ENI) and Credit (IRI).
 The selling process of Nuovo Pignone underwent a competition process, managed by IMI, which was
long and complex, especially because of the «tangentopoli scandal» and its following political crisis.
In March 1993, the company’s president Franco Ciatti was arrested.
 In November 1993, four networks (Alshtom, ABB-Atlas Copco, Dresser Industries and Ingersoll
Rand, General Electric together with another group of Italian banks).
Manufacturing companies – Nuovo Pignone

13
 In May 1994 General Electric purchased 70% of Nuovo Pignone for 7,000 Lira/sh (for a total
700 bil), with a listing at the stock exchange of 6,269 Lira/sh. The premium for the vendor was
about 12% (however, before privatisation began, the share dropped to about 3,000 Lira/sh).
 ENI registered a capital gain of about 450 bil and profited from a financial effect of about 1,200
bil, also considering the debt transferred outside the group.
 The acquisition process lasted for years after the mandatory PPO and the acquisition of new shares
held by ENI. In 1998 ENI sold a remaining package of 9.5% to GE, for another 150 bil more.
 The GE management (committed to investing and increasing production in Italy1
) determined a
significant growth of the company, as demonstrated by the increase in turnover (+134%) and net
invested assets (+230%) few years after privatisation:
The privatisation of Nuovo Pignone was successful and represented the starting point
for the international growth of industrial entities, which stayed on the Italian territory
even though they were controlled by controlled by foreign players2
.
Manufacturing companies – Nuovo Pignone
1
Following the agreement, ENI kept a share of Nuovo Pignone until 2005.
2
Today Nuovo Pignone is the only forerunner (Oil&Gas division) of the GE Group to have a seat outside the US.
1993 €/bil Margins
Turnover 732
Contribution margin 324 44.3%
Operating result 115 15.7%
Net profit 29 4.0%
NIC 540
Net assets 178
NFP 362
1.716
818 47,7%
258 15,0%
86 5,0%
1.784
356
1.427
3.830
2.179 56,9%
439 11,5%
281 7,3%
737
763
-26
Turnover
Contribution margin
Operating result
Net profit
NIC
Net assets
NFP
Turnover
Contribution margin
Operating result
Net profit
NIC
Net assets
NFP

14
 ILVA was created in 1988 from Finsider, belonging to IRI since 1937, and has been an established
leader of the governmental companies operating in the iron and steel industry.
 In 1988, IRI decided to liquidate Finsider (which registered 1,000 bil annual losses and a 10,000 bil
debts) as well as the main companies in the Group (Italsider, Terni Acciai Speciali and Nuova
Deltasider).
 In the framework of the same operation, IRI assigned the iron and steel activities that were considered
recoverable, and the control package of Dalmine to a new company, ILVA SpA, with the objective to
help with the recovering of the iron and steel state sector.
 In the late 80’s ILVA was profiting once again, but in 1992 the company faced a new crisis (2,600 bil
net loss and 8,000 bil debt). The government decided to accept privatisation.
 On October 31 1993, ILVA was liquidated, while its assets were transferred to two new companies:
Ilva Laminati Piani (ILP) and the Acciai Speciali Tirreni (AST). ILP assigned plants in Taranto, Genoa
Sestri, Novi Ligure and Turin, to produce flat laminates.
 After more than a one-year break due to the political crisis, ILP was sold for 2,332 bil in April 1995
to RILP1
, controlled by the Riva Group, for about 75%. The other partners were: the Indian group
Essar, the Acciaierie Valbruna Group, Metalfar from Erba and a network of banks (creditors of the
Riva Group), among which San Paolo, BNL, Cariplo, Banca di Roma and Comit. In 1997 Riva
increased its capital to about 85%.
Manufacturing companies – ILVA
1
RILP kept however the 1994 dividends of ILP (374 bil) and, therefore, had a net expense of 1,958 bil.

15
 The Riva Group was founded in Milan in 1954 by the Riva Family. Before the acquisition, this was a
middle-big size iron and steel group, smaller than ILVA but already internationally-active and
characterised by good economic results.
The two companies before privatisation
 The Riva Group acquired ILP with a 17% premium on the net assets. The EV/BITDA ratio is 4.0x.
 The government, in addition to profits, could get rid of a debt of 1,500 bil.
 In 1995, after the operation, the Riva Group had a turnover of 11,000 bil, thanks to ILP, with
almost 1 bil net profit and 26,500 employees.
This operation was yet another success story for the government, which sold
activities they could no longer manage economically, as well as for the buyer,
who became one of the top 10 iron and steel groups worldwide during the
following years.
Manufacturing companies – ILVA
+52% vs. 2009
€/mil Margins €/mil Margins
1,576 2.758
110 7.0% 492 17,8%
58 3.7% 352 12,8%
n.a. 775
426 1.030
20.000 ca.
Riva Group - 1994 ILP - 1994
€/mil Margins
8,384
642 7.7%
-66 -0.8%
2,487
3,895
About 22,000
Riva Group - 2010
About 6,000
Turnover
GTM
Net profit
Net assets
NFP
Employees
Turnover
GTM
Net profit
Net assets
NFP
Employees
Turnover
GTM
Net profit
Net assets
NFP
Employees

16
 SME (Società Meridionale di Elettricità) was created by Comit in 1899 as an Italian company
producing power energy, operating in the region of Campania and in the rest of southern Italy.
 In 1937 its ownership moved from the banks to the newly instituted IRI, in particular to Finelettrica
(1962).
 After the nationalisation of the power energy sector in 1962, the company used the resources from the
compensations assigned by the government to invest in the agriculture and food sector.
 In 1963 the first companies were acquired: Supermercati GS, Cirio and Surgela. In the following years
(between ’65 to ’75) Motta, Alemagna, Alimont and Star followed. Also some important companies,
such as Autogrill and Italge, were by then reporting to SME.
 During the 70’s and until the early 80’s, SME was the biggest agro-industrial business group and
among the major companies in IRI that could report the best economic results.
 In 1985, IRI, in the framework of a discharging plan with the objective to focus on more strategic
sectors compared to the food industry, decided to sell SME, even though the outcomes were positive.
 Initially, IRI decided to sell to Entrepreneur Carlo De Benedetti, already owner of Buitoni and
Perugina. The offered price was about 500 bil Lira for 44% of the shares.
 Following obstacles created by the government and other political powers, various buyers made new
offers; a series of legal disputes arose and doomed the operation.
 SME was still growing: in 1993 its turnover was 6,000 bil, its consolidated profit 131 bil, the company
invested 330 bil, with 15,000 employees.
Manufacturing companies – SME

17
 In 1992 the government decided to pursue the selling of SME’s industrial activities (Italgel and
Cirio Bertolli de Rica), as well as part of IRI’s participation in the company.
 Before the privatisation, the three main activities of the group were separated (frozen foods, canned
goods, and big distribution/catering) between three different companies (Finanziaria Italgel,
Finanziaria Cirio Bertolli De Rica [CBD] and SME, this one including Supermercati GS and
Autogrill). After the separation, IRI held 62.1% of the assets of each company.
 The separation had the objective to maximise sale profits, vs. a single discharge.
 The sale operations were complicated and continued from 1993 until 1996, providing the
government with 2,044 bil. The following summarises what happened:
 in 1993 Italgel (brands: Motta, Alemagna, Antica Gelateria del Corso, Surgela, Valle degli Orti)
was sold to Nestlé for 431 bil
 in 1993 CBD was sold to FISVI, managed by the entrepreneur Lamiranda, for 311 bil. In
1994 Lamiranda sold Bertolli to Unilever for 253 bil and Cirio to Sgrit (Cragnotti Group) for
about 400 bil, obtaining therefore more than twice as much as what he had spent
 in 1995-1996 SME (GS + Autogrill) was sold to the network Edizione Holding-Del with a
complicated procedure that gave a return of 1,302 bil. In 2000, after four years, the entire
share held by GS (64%) was sold to the Carrefour Group for 2.6 bil €.
Manufacturing companies – SME
This «crumbled» privatisation gave a return to the government of four times as much as the offer
received in 1986. Buyers also benefitted from the privatisation, on both economical and industrial
levels. Today Autogrill is a worldwide entity, as it included groups like HMSHost, Receco, Anton
Airfood. GS became part of the International Carrefour Group.

18
 Just like the cases of Nuovo Pignone, ILVA and, to a certain extent, SME, the
privatisation of manufacturing companies often represented a success for the
government, because:
 strategic assets were no longer sold, which were characterised by dimensions and, in
particular, management patterns that were not always adequate for international
competition; this also basically protects employment
 high or less high capital gains were achieved, often on assets that had determined
losses for years. At the same time, their financial debts were taken from the
government’s budget
 the sold companies acquired more energy. Synergies with the buyers determined
the industrial growth of a specific area (see the case Nuovo Pignone) or the
creation of new «national champions» able to acquire in the middle-term worldwide
relevance (see the case of ILVA-Riva).
Manufacturing companies
The main success element was the selling of these companies to
entities operating in the same sector, able to add value to the
companies during the acquisition (for the government’s benefit)
and to efficiently manage them afterwards.

19
 The privatisation of service and infrastructure companies are usually
accomplished by a listing of part of the assets at the stock exchange...
 in 1995 ENI (partial privatisation)
 in 1999 ENEL (partial privatisation)
 …or through a direct sale to private entities:
 in 1997 Telecom, (initially partial, then full privatisation), which changed
ownership several times;
 in 1997 SEAT Pagine Gialle (full privatisation);
 in 1999 Autostrade (full privatisation);
 in 1999-2000 Aeroporti di Roma.
Service and infrastructure companies

20
 The main examples of privatisation of service and infrastructure companies
through a listing at the stock exchange are ENI and ENEL.

 After 1995, a little over two and half years, the Treasury set about 63% of capital shares on the market
through 4 bids, with a total income of over 21 bil €.
 This amount, during that time period, represented the biggest revenue ever achieved by a
Western European government with the sale of only one company.
 The market reacted positively to the ENI offers, moving from the 194,000 subscribers at the time of the
IPO, to 1.7 mil in the fourth tranche.
 The employees contributed decisively to the success of the different tranches, moving from about
30,000 subscribers at the IPO (40% of the eligible) to about 41,000 with «ENI 4» (totally 70% of the
eligible).
 In February 2001 a fifth collect began, this time with institutional investors, for 5% of the company
assets, with a total revenue of 2.7 bil €.
21
Service and infrastructure companies – ENI
ENI is today the second biggest energy group in Europe, with stocks worth 16.5 €/sh.
ENI’s privatisation was a success for the government as well as for the investors
Price at positioning
Number of located
shares
of which, per bonus
share assignment
Company asset
percentage (1)
Revenue
(euro/share)
(mil euro)

22
Service and infrastructure companies – ENI
ENI’s stock trend after privatisation
Note: no data available before 1996
16.5
€/sh

23
 In 1992, in the framework of a governmental budget reorganisation, ENEL turned into a SpA (Italian:
Società per azioni, limited company), in which the Treasury appeared as the sole shareholder.
 In 1999 the privatisation process started, and was organised in 5 tranches: one in 1999, two in 2003,
another one in 2004 and a final one in 2005.
 The first tranche was placed on the market for 4.3 €/sh. This was a very good price for the
government when considering that today (two years later) the stock now has a value of about
2.5 €/sh.
 Overall, these five tranches gave an even higher value than with ENI’s privatisation, and provided the
Treasury with roughly 34 bil € for about 75% of the assets.
The privatisations per listing at the stock exchange were
successful for the Government, in the ENEL case, but not for the
subscribers.
Service and infrastructure companies – ENEL
Tranche Year Sold share Price (€/sh.) Proceeds (bil €)
1 1999 32.42% 4.3 16.5
2 2003 6.60% 5.4 2.2
3 2003 10.35% 5.0 3.2 Sold to CDP
4 2004 19.30% 6.6 7.6
5 2005 9.37% 7.1 4.1
TOTAL 78.04% 33.6

24
ENEL’s stock trend after privatisation
Note: no data available before 2000
2.5
€/sh
Service and infrastructure companies – ENEL

25
 The main examples of privatisation of service and infrastructure companies through
direct selling to private entities are Telecom Italia, SEAT Pagine Gialle and
Autostrade.

26
 STET and Telecom Italia merged in September 1997. The Treasury holds 45% of the post-merge
capital.
 Also in 1997, about 35% of the assets (about 13 bil €) were sold (through direct sales and public
offering).
 A «small but hard core» holding just 6.6% of the shares, led by IFIL (FIAT) – which holds only 0.6%!
– overtook the control of the company and replaced the management.
 Among all analised privatisations, this is the least profitable for the government: the EV/EBITDA
ratio, for example, is a 3.4-fold (compared to 7.2 of ENEL and 5.4 of ENI).
 After this, the company changed ownership many times (Colaninno, Pirelli, Telco, Telefonica), which
led to a heavy debt and the loss of the international prestige it had acquired in the years of STET
management.
 The government’s presence with Telecom Italia will persist until 2002 with the 5.2% share held by the
treasury, and until 2006 with the 2.3% share held by the Bank of Italy.
Service and infrastructure companies – Telecom Italia
Company Year EV/EBITDA Price/PN
Nuovo Pignone 1994 7.39x 2.90x
ILVA 1995 4.03x 1.17x
ENI (average 5 tranche) 1995 - 2001 5.40x 2.10x
ENEL(ony 1st tranche) 1999 7.20x 3.00x
Telecom Italia 1997 3.40x 1.70x
Autostrade 1999 9.40x 4.50x

27
Telecom Italia – Net Financial Position Variations/ EBITDA
 The following leverage buy-out operations with Telecom led to a debt «explosion», which is still
lasting today:
Among the biggest companies, Telecom Italia is the only privatisation that was a true and
complete failure, despite the concessors and private investors who followed the process,
and "massacred" the company with debts.
Colaninno
and Capitali
Coraggiosi
acquisition
Olimpia
(Pirelli and
others)
acquisition
Telefonica
enters the
company
0.7
1.5
1.6
2.4
2.3
2.0
3.2
2.9
3.2 3.1 3.1
2.8
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

28
Telecome Italias’s stock trend since 1997 to date
0.83
€/sh

29
 In January 1997 Seat (IRI-STET Group) was listed at the stock exchange and, in
November of the same year, driven by an unintelligible conflict of interest, a private
entrepreneurial network (Ottobi) ─ which counted affiliations with Telecom Italia (in
net minority), Comit, De Agostini and Investitori Associati ─ took over 61.27% of
SEAT shares, held at that time by the Treasury.
 The Treasury paid 848.7 mil € of those share (price for 61.27%, equal to 1.38 bil € for
100%), whereas the free floating PPO was basically deserted.
 Since November 2000 SEAT Pagine Gialle returned under the ownership of the
Telecom Group, through the integration of Tin.it.
 At the end of the operation, the Telecom Group obtained 65.09% of SEAT Pagine
Gialle. In particular, Telecom paid 40.8% held by the other partners of Ottobi, which
amounted to 6.7 bil €, for an equity value of 100%, equal to 16.4 bil € (at that time the
stock achieved a capitalisation of about 20 bil €.
 Overall, three years following privatisation, the other partners obtained from
Telecom a price 10 times bigger than the price paid to the government!
Service and infrastructure companies – SEAT Pagine Gialle
1
For ordinary shares the offered price is 713 Lira/sh, vs. a stock exchange value that, in the days immediately before the PPO, peaked to
1,292 Lira/sh. The price offered for the PPO was aligned with the price paid by Ottobi to the Tresury just few months before, which the
market already considered too low compared to the company real value.

30
 In August 2003 Seat Pagine Gialle split up into two companies:
 Seat SpA, assigned with the following activities:
• advertisement, sales and publication of paper and online products
• delivery of new information services via telephone, and call center activities
• marketing services and database management for companies.
 Telecom Italia Media SpA, 77.7% of which is now controlled by the Telecom
Italia Group, and operates in television production (it controls LA7 and MTV
Italia).
 Within the same operation, Silver SpA, a consortium that included the CP Partner
Funds, CVC, Investitori Associati and Permira, purchased 62.5% of Seat SpA from the
Telecom Group for 4.93 bil €.
 The consortium burdened
the company with a very
big debt, which is still
present until today:
Net debt SEAT PG (mil €)
717
460
3,926
3,635
3,406
3,274
3,082
2,763 2,731 2,703
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

31
SEAT PG’s stock trend from the separation to date
Note: no data available before 2003, year of the separation from Telecom Italia Media
0.05
€/sh

32
 In 1999 70% of Autostrade was sold for about 13.5 bil € by the government
(through PPO and tender).
 Schemaventotto (led by Edizione Holding) won the tender and purchased 30% of
the company through IRI at about 7.05 €/sh. The market absorbed about 40% at
6.75 €/sh.
 This price represented a premium on the market value (part of the assets of
Autostrade were already listed) of 5%.
 After three years only (2002), the very same Schemaventotto purchased
(through a vehicle company) the absolute majority with a PPO, at the price
of 10 €/sh, a value 43% higher than what the government obtained.
 After another four years (2006), Schemaventotto agreed de facto on the
transfer of Autostrade to Abertis at 25 €/sh, which was over 250% more than
the price IRI paid.
Service and infrastructure companies – Autostrade
Autostrade is still a solid company today.

33
Service and infrastructure companies – Autostrade
Autostrade/Atlantia’s stock trend after privatisation
11.6
€/sh

34
 Aeroporti di Roma (ADR) was born in 1974 to manage Rome’s airport network. It is an exclusive
concessionaire for the management of the Fiumicino and Ciampino Airports.
 ADR is owned by IRI, which controls it through Fintecna and Cofiri an started its privatisation process
in 1999.
 After two tender phases, the network, made of Gemina (42%), Falck (31%), Italpetroli (16%) and
Impregilo (11%), won, and acquired 51.2% of the ADR shares for 1,327 mil € through the
Leonardo company, which then acquired 45% more of the ADR shares through a PPO of
1,000 mil €.
 The price Leonardo paid, however, included a dividend of about 1,519 mil €, achieved by the
company in 2001 thanks to a new debt (over 1,200 mil €). Overall, therefore, Leonardo obtained
96% of ADR for 808 mil € (carrying value).
 In 2002 the Australian Macquarie Fund purchased about 44.68% of ADR’s assets from Leonardo for
480 mil € (1,704 mil € for 100%), which means the Fund had almost a 30% premium of the
carrying value.
 In 2007 Gemina1
became Leonardo’s only shareholder, purchasing 31% of assets from the Falck
Group for 220 mil €, 16% from Italpetroli for 83 mil € and 11% from Impregilo for 63 mil €.
 In 2007 Gemina purchased 44.7% of ADR’s assets from Macquarie for 1,237 mil € ─ 2.5 times the
price paid by Macquarie just five years before and over three times Leonardo’s net expenses during
the privatisation process!
Service and infrastructure companies – ADR
1 After numerous ownership changes, Gemina’s current relative majority (about 35%) is held by Sintonia (reporting to Edizione Holding),
either directly or through its subsidiary Investimenti e Infrastrutture SpA.

35
Service and infrastructure companies – ADR
ADR net debt (mil €)
Macquarie
acquisition
Macquarie sale
Falck, Italpetroli,
Impregilo sale
In 10 years ADR changed ownership three times and accumulated a net debt that,
today, still amounts to about 1,250 mil € (NFP/EBITDA > 4.5x!), after paying capital
gains to the shareholders (and 190 mil € dividends between 2000 and 2007)!
This determined a very slow growth in the decade following privatisation (CAGR
proceeds 2001-2010: +3%, basically ceasing all investments).
Privatisation
After
privatisation,
debt grows to
reach over 1.6 bil
€
A big debt and
regulatory
uncertainty led to a
progressive
worsening of the
credit risk
0,09
1.63 1.58
1.65 1.60
1.49
1.35 1.32
1.22
1.32
1.24
1.16
0,00
0,20
0,40
0,60
0,80
1,00
1,20
1,40
1,60
1,80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

36
 Aside from providing cash resources to public finance, the objective of the
privatisations through direct selling to private entities, was to assign the
infrastructure management to private bodies able to promote their development
and manage the assets efficiently.
 The privatisation of services and infrastructures, however, developed under
constraints and haste, which favoured the assignment of the assets on a family-
like basis.
 The idea was initially good and understandable.
 The involved «families», however, had to manage companies that were outside
their core business, with high cash flows, typical of infrastructures.
Therefore, despite their previous success stories in their respective sectors (very
often completely different from infrastructures), these entrepreneurs were led to
operate an asset management with more of a financial than industrial
approach, neglecting development and investment. None of these privatised
companies, with private entities, experienced development.

37
Notes on privatisations in Europe

38
 From the beginning of the 20th century until the late 70s, all major Western
European countries were characterised by a growing public intervention, with the
objective to promote the recovery and innovate the production and infrastructure
system.
 Up until the World War II aftermath, numerous «nationalisations» of
companies took place, allowing the government to play an entrepreneurial
role during this time.
 The economic crisis of the 70’s and 80’s, especially with the oil shock, accounted
for a rise in the deficit and public debt in almost all countries and, consequently,
the governments’ need to cash in, which grew stronger in the 90’s, in view of the
adoption of the Euro.
 Ronald Reagan and, more particularly Margaret Thatcher’s policies in the USA
and in the UK provided the ideological basis for the de-nationalisation of
companies.
 Besides the economic recovery, the objective was to achieve more efficiency
within the companies, as well as freedom of choice for consumers, the breaking
free of government monopolies, financial market development and creation of a
widespread shared ownership.

39
 Despite having common origins, the «privatisation phase» was characterised
by very different features and timelines from country to country, based on
their specific economic patterns, as well as historical and political background.
The main differences occurred in:
 time: Great Britain was responsible for most privatisation in the 80’s; in France this
process was of particular focus in the 2000s; in Italy, Germany and Spain, because of
different reasons (economic/political crisis, reunification, post-dictatorship crisis
after Franco), the privatisation process was stronger during the 90’s
 strategy: some countries (UK) chose a complete drop out of governmental presence
in the economy, others (France, Germany) chose to keep a strong state presence in
the privatised companies anyway
 social/economic background: most countries (UK, France, Germany) aimed for a
widespread shared ownership of the privatised companies (creating big public
companies), others (Italy) focused, at least in part, on a reference industrial investor.
 The strong economic, political and historical differences of the privatisation
processes in various countries makes it hard to identify a reference pattern, a
benchmark.

40
Box 1 – Privatisation processes in the main European countries (80s and 90s)
see further down for summary table
UK: the first country to start an important privatisation plan in 1980 during the Thatcher Government,
and the first country operating with a more radical approach. The plan’s main objectives were: a drive
towards competition (to improve the quality of products and services and to reduce costs), the creation of
a widespread shared ownership, the reduction of the state demand. The English privatisations are, for
the most part, total and are mainly achieved through listing at the stock exchange (with the objective
to achieve a widespread shared ownership and, at the same time, to develop the financial markets). In
some cases, for a few years, the government held a «golden share» with veto power on some strategic
decisions. However, it also acted as a regulator of the liberalised markets, through the creation of strong
sector authorities (eg. Ofcom, Ofwat, etc.)
Germany: the German capitalistic approach, based on cross-holdings between banks and companies
(that had therefore shared stocks and governance rights among each other), has always determined a
reduced government presence in the economy and the absence of nationalisation plans. Consequently, the
privatisations focused mainly on: 1) the former East German companies after the reunification, and 2) a
few big state monopolies (Deutsche Tekelom, Deutsche Post, Lufthansa, Volkswagen). In the first
scenario, the privatisations were accomplished through direct sales to private entrepreneurs (small to
medium size companies) or to institutional investors from West Germany. In the second scenario, the
listing at the stock exchange was favoured, with the government keeping some shares (still the case today
with Volkswagen, Deutsche Telekom, Deutsche Post). The revenues from the privatisations, mainly
achieved during the 90’s, are completely used to balance the public accounts after the reunification.

41
 France: in France there were massive nationalisation plans, which lasted for over 50 year until 1982,
and resulted in a strong public presence in finance. In 1986, the Chirac government started to change
directions to enter a first phase of privatisation. The French privatisation pattern, probably the most
complex, included:
 the creation of a «selected set» of about 10-20 shareholders (mainly institutional investors
chosen by the government), each with a stake ranging from 0.24 to 5%. Such shareholders had
privileged rights, with a price increase of the shares of 2-10%. The objective of the «selected set»
was to ensure a stable shared ownership and avoid hostile takeover bids
 the sales of 10% shares to the privatised companies’ employees
 a 20% cap on participation for foreign partners (to ensure that the company stayed under national
control)
 a «golden share» («action specifique») for the government, with a 5-year duration
 the quotation at the stock exchange of the remaining shares.
This process allowed the creation of important public companies that firmly remained under French
control. Unlike other European countries, France’s privatisation process progressed also in the
2000’s (actually, with a current intensification or privatisation).
 Spain: in Spain, most companies had been nationalised during the Franco dictatorship through
INI (a national body developed on the Italian IRI model). Privatisations started in 1986 with the
Gonzales government and, at first some important assets were sold to foreigners (e.g. SEAT to
Volkswagen). At a later stage, especially throughout the 90’s, the biggest national companies
(Endesa, Repsol, and Telefonica) are privatised through quotation at the stock exchange, with the
objective to create public companies with widespread shared ownership.

42
Country Strategy Prevailing sale
modality
Prevailing share
ownership
Main operations (80s
and 90s)
Total revenues
(bil USD)
Italy Full privatisation
(with the exception of
ENEL and ENI)
Direct sales Private entities
(important families,
industrial investors)
Lanerossi, ILVA, ENI, ENEL,
Telecom Italia, Autostrade,
SME, AdR
107
UK Full privatisation
(with control by the
authorities)
Quotation Widespread shared
ownership
BP, British Gas, British
Airways, BAA, British
Telecom
112
Germany Full privatisation
(Eastern German
companies) and
partial privatisations
(big state companies)
Direct salses
(Eastern Germany
companies) and
quotation (big
state comanies)
Private entities
(Eastern German
companies),
widespread
/institutional shared
ownership (big
national companies),
government
8,000 Eastern Germany
companies, Volkswagen,
Deutsche Post, Deutsche
Postbank, Deutsche Telekom,
Lufthansa.
70
France Partial privatisation Quotation «Selected set»
(institutional
investors),
employees, savers,
government
Saint-Gobain, Paribas, BNP,
Renault, France Telecom,
Autoroutes du Sud de la
France.
59
Spain Full privatisation Sales to foreigners
/ quotation
Widespread shared
ownership /
institutional investors
SEAT, Endesa, Repsol,
Telefonica
46
Privatisation in the main European countries – 80s and 90s

43
 Although, as previously discussed, it is not possible to identify a reference
benchmark because of the many differences among the countries, there still were
some common marks in the privatisation processes analysed above:
 all countries, with exception of Italy, had the objective to transform the privatised
companies into real public companies, characterised by a widespread shared
ownership and an ability to compete on the international markets (which, in those
years, were starting to go «global»)
 consequently, in all countries, with exception of Italy, the privatisation of big public
assets were achieved mainly through quotation at the stock exchange
 another consequence of this process was the creation, or strengthening of institutional
investors (investment funds, merchant banks, insurance companies, pension funds,
etc.), a circumstance that was not found in Italy, or was very limited
 finally, the traditionally «stronger» governments (especially Germany and
France) were inclined to keep relevant shares in strategic assets. The English
government, although aiming at full privatisations, took on a regulatory role through
the authorities. In this case too, Italy was an exception: despite choosing full
privatisations, the role of the authorities was not as strong as in Great Britain.
Italy, despite obtaining many profits from privatisation, was not able to create
«national champions» in the various sectors (with the exception of the energy sector),
able to drive an internal development in the country and to achieve international
relevance.

44
F2i as a privatisation tool of the local assets

45
Just like it happened for the central government in the past, the local bodies
today are facing critical financial conditions:
 high debt, more and more frequently used to cover the current expenditure, not just for
investments
 decreasing transfers from the government
 more and more binding restrictions for the internal stability pact.
This situation accounts for extreme difficulties to collect funds, especially for
the infrastructure and local public service sectors, in order to:
 participate in the capital increase of the subsidiaries, necessary to ensure the
development and efficiency of the services delivered to citizens
 further develop existing infrastructures and finance the construction of new ones, which
are more and more needed by the territory.

46
In addition, some of the companies that manage local public services are now
also facing a series of obstacles, typical for their public nature:
 plurality of partners (often without a reference stakeholder) with quite differentiated
problems, that affect each other
 lack of financial resources (connected to the public shareholders’ problems), necessary to
accomplish important investments to maintain and develop the managed assets
 fragmentation of the sectors in which they operate, caused by «parochial» policies that
are not integrated in a national strategy.
Even the biggest listed companies – those born from the aggregation process of
the past years (A2A, Hera, IREN, ACEA, etc.) – still present internal local
contrasting positions of merged entities. This limits their development
possibilities and their managing field of action.

47
Financial problems, management difficulties and an infrastructure deficit
inevitably imply a reduction of the local bodies’ presence in the participating
companies’ assets.
 This need was already recognised by the «Ronchi Decree», which identified a solution for the
introduction of a private partner in the companies managing the assets.
 The effects of the Ronchi Decree however were then cancelled by the referendum in June 2011,
whose objective – contrary to the European dispositions – was to maintain the public management of
local services.
 Although the referendum was won, the lack of funds still determines the need for local bodies to
resort to private funds.
 Recently the debate on a new phase of privatisations was reopened; such privatisations would in
fact focus on the local bodies.

48
 The phase of «big privatisations», which focused on assets managed by big
central bodies in particular (IRI, ENI, ENEL, etc.), had minor effects on
local public services.
 Despite listing the minority shares of various former municipalised companies at
the stock exchange (HERA, A2A, ACEA, IREN, Acegas, etc.), they are still
under the fierce control of local bodies.
 This contributed to the fact that sectors – such as the water system, waste
management and gas distribution – were, and still are, very fragmented.
 In Italy, it was not possible to create big «national champions» for these sectors
(such as, for example, E.On in Germany, Veolia in France, EdF, GdF, etc.),
which would have been able to compete at an international level in the long term.
Local bodies participate in over 5,500 companies (with a total turnover
of 43 bil € and 240,000 employees), for a total estimated value of about
30-35 bil €! (Source: Privatization Barometer – Mattei Foundation).

49
 The key topics brought out through this analysis include…
 the lights and shadows of the privatisation phase in the 90’s
 the need for a new privatisation phase, as a solution to the high debts of
local bodies
 … we therefore came up with the idea of F2i, a private yet institutional fund
that can:
 aggregate the existing infrastructures into industries, creating «national
champions» for each separated segment
 use funds from this asset management to allow their development
 act as a partner for local bodies in the privatisation process of their
assets.

50
 Thanks to a fundraising of 1,852 mil €, F2i is the biggest fund operating in Italy
and counts among the biggest country infrastructure funds worldwide.
 F2i was created as a private, yet institutional tool by high standing sponsors,
who contributed to the establishment of the Fund’s solid reputation:
 the government, through GDP
 major Italian banks (Unicredit, Intesa SanPaolo)
 an important international bank (Merrill Lynch – BoA)
 the networks of former banking foundations and private welfare funds
 life insurance companies and pension funds.

51
Following its mission and the institutional nature of its
investors, F2i aims for long-term participation with an
industrial understanding.
F2i investors (per category)
Categories (Fund I) N. Invest. Subscribed
amount
% on the
Fund
Banks 7 593 M€ 32.02%
Welfare funds 13 487 M€ 26.30%
Foundations 26 439 M€ 23.70%
Insurances 4 175 M€ 9.45%
Public financial institutions (CDP) 1 150 M€ 8.10%
Management SGR / Sponsors 1 8 M€ 0.43%
Total 52 1,852 M€ 100.00%

52
 F2i has a planned extension of 15 years, 4 of which (+2 potentially) are
dedicated to investments, the others to management.
F2i virtually exhausted its resources well before the earliest deadline of the
investment period!
Feb Mar Apr Mag Giu Lug Ago Set Ott Nov Dic Gen Feb Mar Apr Mag Giu Lug Ago Set Ott Nov Dic
2013 2015
Fund IPO
Investment period extension
2010 2011 2012 20142007 2008 2009
Project /
Authorization
Fund Raising Investment period
Management
and disposal
3ƒ
53.5 mil €
Today
6ƒ
invest.
294.9 mil €
First Closing
1.55 bil €
Final
Closing
1,852 bil €
First dividend
26 mil € (Fund management costs)
1ƒ 2ƒ
.
2.0 mil €(1)
5ƒ
.
29.6 mil €(1)
4ƒ
50.1 mil €
7ƒ
invest.
237.5 mil €
Gen Feb Mar Apr Mag Giu Lug Ago Set Ott Nov Dic
2008
2009
2010
8ƒ
100.2 mil €
9ƒ
.
73.8 mil €
10ƒ
.
182.0 mil €
+ 28.8 mil €(2)
11ƒ
.
67.7 mil €
(1)
(2) Moon and Link projects about to be competed
2011
13ƒ
invest.
389 mil €
12ƒ
invest.
64.8 mil €
invest.Invest. invest invest. invest. invest invest invest invest
Dismissed participations
1,679 mil € (90% of the fundraising)
~ 1,653 miil € +
79,4 mil €
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
First closing
of the
fundraising,
beginn of
investments

1,621.8 mil € (96.6%)
25.6 mil € (1.5%)
53
1,679.1 mil €
GAS
RENEWABLES
HIGHWAYS
WATER
AIRPORT
TLC
Porject approved but
still not completed
Includes the
participation in
software design
Subject to the
procedure of other
partners’ preemption
Committed
436.5 mil € (26.0%)
237.5 mil € (14.1%)
129.5 mil € (7.7%)
489.2 mil € (29.1%)
210.8 mil € (12.6%)
118.3 mil € (7.1%)
Investments currently in the portfolio
+ Dismissions
= COMMITTED TOTAL
+ Fund management costs
75% 85.2%
100%
100%
100% 40%
15.7%
100%
49.8%
100% 70%
29.8%
87,5% 61.4%
26.3%
7.4%
Infracis Srl
SEA
Autostrada BS PD
Progetti Milano e
Brescia
2iGas Srl
G6 Rete Gas SpA
F2i Rete Idrica
Italiana SpA
F2i Energie
Rinnovabili Srl
F2i
Reti Italia Srl
GESAC SpA
Metroweb SpA
F2i Aeroporti
SpA
F2i TLC SpA
ENEL
Rete Gas SpA
Mediterranea
delle Acque SpA
Alerion
CleanPower SpA
HFV SpA
31.7 mil € (1.9%)

54
2i Gas (ex E.On Rete)
Objective: to represent an important independent manager of gas distribution
networks and to act as an aggregating entity in a currently aggregating sector.
Objective: to develop two independent entities with authoritative
shareholders, managers and management. Today the renewable energy sector
is afflicted by contradicting regulations that create confusion for the
operating partners!
Objective: to access the closed sector of highways as a reference stakeholder
for companies with extremely fragmented public shareholders.
Objective: to create a «national champion» in a sector crucial to Italy, which
requires great investments to modernise the existing plants.
Objective: to create an aggregation focus in a strongly fragmented sector,
characterised by a worrisome predominance, mainly publicly-owned, with no
specific strategy.
ENEL Rete Gas
Alerion
HFV
Infracis
Mediterranea
delle Acque
GESAC
SEA
G6 Rete Gas
Objective: to create a development focus in the new generation of the TLC
network sector to accelerate the technological development of infrastructures
in big Italian cities.
Metroweb
Progetti Moon e Link
Autostrada BS-PD
GAS
RENEWABLES
HIGHWAYS
WATER
AIRPORTS
TLC
 F2i acts as a true «public company»: each project is developed with the
objective to create an industry within a specific sector, fostering cooperation
among subsidiaries and the integration of the managed infrastructure
networks.

55
 Within four years, F2i managed to offer a new business model for
infrastructures in Italy by creating a structured group of companies and
company industries, each representing a benchmark in their respective
sector.
 The companies where F2i holds the share majority or plays an important
role in their governance, registered in 20111
:
 aggregated turnover: 1,559 mil €
 EBITDA: 657 mil € (EBITDA margin: 42%)
 Employees: about 8,000
 investments: 438 mil € (67% EBITDA)
1
Aggregated closing data 2011. Referred to: ERG, 2i Gas, G6 Rete, Alerion CleanPower, HFV, Mediterranea
delle Acque, GESAC, SEA, Metroweb

 E.On Rete Gas
 Gesac
 G6 Rete Gas
 Metroweb
56
 Thanks to F2i, important assets managed by foreign companies have
returned, together with their cash flows, under Italian control:

57
o participate in the aquisition of brownfield assets sold by public bodies too, to support its own
development. As an important innovation, selling institutional parties are often granted an earn-
out, a protection against future valorisations above specific limits
o involve both national and local financial systems in management companies, the same as real
international public companies
o ensure an industrial management, aiming for effectiveness and the companies’ managing
development. F2i aims to obtain the majority of stakes in the subsidiaries to be able to take
action on the management
o maintain a balanced financial management, and avoid the impoverishment of the companies
through exaggerated debts and extraordinary maxi-dividends
o promote development, thanks to reinvestment of a great part of the cash flows generated by
strengthened assets and managed networks
o foster aggregation processes in sectors characterised by great fragmentation and high national
and European development potential
o ensure management enhancement of the subsidiaries by involving the management in corporate
development and personal improvement projects.
 F2i can represent the ideal partner for public entities in the privatisation
process. Indeed, F2i can:

58
 The effectivness of F2i’s body of work is proven by the fact that the Fund
virtually exhausted its resources well before the earliest deadline of the
investment period.
 This happened even though F2i operated with extreme caution in order to
avoid hasty operations in a time of great uncertainty and a progressively
worsening global crisis.
This achievement is leading F2i to launch a new Fund that will
allow its work to progress further.

59
The results achieved by F2i, almost «spontaneously», led its institutional
partner, CDP, to reproduce this experience in other key sectors of the
Italian economy.
F2i has therefore become a model tool for economic policy!
Two important investment vehicles followed the footsteps of the F2i
model:
 the Italian Investment Fund (target 3 bil €): addressing SMEs, with the
objective to strengthen their assets and increase their size
 the Italian Strategic Fund (target 7 bil €): addressing bigger companies, of
strategic importance for Italy, with the objective to increase their
competitiveness at an international level and keep them under Italian control.
In addition, a new infrastructure fund, based on the F2i model, is
currently being planned for investments in new projects (greenfield).

60
Conclusions

61
 During the 90’s, Italy was the
leading European country for the
accomplishment of privatisations
(over 100 bil USD, 70% of which
was generated by the dismissals
described above)...
Conclusions
 …even though the impact of
privatisation on the public debt
was limited.
Proceeds from the privatisations of the main European
countries in 1991 and 2000 (bil USD)
Average: 0.75%
Revenue incidence from privatisations on public debt amount
Source: Privatisation Barometer – Mattei Foundation
103
67
55 54
43
-
20
40
60
80
100
120
Italy Germany UK France Spain
0.00%
0.50%
1.00%
1.50%
2.00%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

62
 Overall, the big privatisation transitions during the 90’s in Italy obtained
different results, based on the different strategies applied.
 Privatisations through quotation at the stock exchange, besides representing
an economical success for the government, transformed the former public
bodies in public companies, improving their efficiency and turning them into
primary companies able to compete at an international level.
 However, such results were obtained by pushing on the stock exchange (at least in the
ENEL case), with high collocation prices that could not always benefit investors
(among whom were many small financiers).
 The privatisations through direct sales to private entities, on the other hand:
 were generally successful in the manufacturing sector, in particular thanks to the
takeover by entrepreneurs operating in the same sector of the acquired companies
 seemed to promote the private entities themselves, in the manufacturing sector,
leading them to start a «hit and run» game and risking – as was the case for Telecom
and almost happened for Autostrade – the foreign control of assets that were
strategic for Italy.
Conclusions

63
 for the manufacturing sector, favour the operating leaders of the same core
businesses
 for infrastructures/services, it is better to favour full stock exchange quotations or
shared ownerships of «public companies», such as F2i
 set lock-up bonds (for at least 5-7 years)
 always introduce the concept of «earn-out» to favour the public vendor in case of
re-selling the company within 5-10 years
 set up bindings to prevent selling the company to buyers who would place an
exceeding acquisition debt on the company itself.
Conclusions
A couple of rules taught by big privatisations:
Based on these assumptions, the topic of formerly-municipalised
companies – especially in the water sector, gas distribution and
WTE – should be urgently addressed.

64
 During the 90’s, privatisation focused mostly on assets managed by big central
entities (indeed IRI, ENI, ENEL) and, only marginally, on local public services
(especially through quotation at the stock exchange of minority shares of
subsidiaries).
 Just like it happened to the government in the past, the local entities today are
facing critical conditions, because of financial and management problems, and
should, therefore, take an interest in completing the privatisation process of
formerly-municipalised companies.
 When considering the experience of the «big privatisation» phase, it is
necessary to identify the right private partner to make the process flourish.
 F2i was also born with the objective to provide a response to this need, which
is a long-term and financially-solid partner, private and institutional at the
same time, able to respect public interests and roles.
 F2i can be exactly considered as Italy’s answer to that type of public
company, available in other countries through the best financial institutions.
Conclusions

Italy's Privatisation Efforts in the 1980s and 1990s

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Italy's Privatisation Efforts in the 1980s and 1990s