Advisory Group on PrivatisationThirteenth Plenary Session
Privatisation, Capital Market Development and Pension Funds
Italian Privatisations and Corporate Governance Issues
in the New Euro Environment
Paris, 21-22 September 1999
Pietro Ciucci - General Manager - IRI Spa
Patterns of change in corporate finance and their impact on the governance
and organisation of enterprises
Fig.1 - INTEREST RATES CONVERGENCE
Euroland
Source: IRI - Economic Research Department /Bloomberg Financial Markets.
29/0
1/93
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
31/0
5/93
30/0
9/93
31/0
1/94
31/0
5/94
30/0
9/94
31/0
1/95
31/0
5/95
29/0
9/95
31/0
1/96
31/0
5/96
30/0
9/96
31/0
1/97
30/0
5/97
30/0
9/97
30/0
1/98
29/0
5/98
30/0
9/98
29/0
1/99
31/0
5/99
RIBOR 1M (ITA) PIBOR 1M (FRA) FIBOR 1M (GER)LIBOR 1M (UK) MIBOR 1M (SPA)
SHORT TERM LONG TERM
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
gen-
93
mag
-93
set-9
3
gen-
94
mag
-94
set-9
4
gen-
95
mag
-95
set-9
5
gen-
96
mag
-96
set-9
6
gen-
97
mag
-97
set-9
7
gen-
98
mag
-98
set-9
8
gen-
99
mag
-99
GOVT 10YR (ITA) GOVT 10YR (UK) GOVT 10YR (FRA)
GOVT 10YR (DH) GOVT 10YR (SPA)
Fig.2 - YIELD CURVES Italy vs Germany
Source: IRI - Economic Research Department / Bloomberg Financial Markets.
2,5
3,5
4,5
5,5
2
3
4
5
3MO 6MO 1YR 2YR 3YR 4YR 5YR 6YR 7YR 8YR 9YR 10YR
ITA GOVT (BTP) 5/1/98 GER GOVT 5/1/98
ITA GOVT (BTP) 9/7/99 GER GOVT 9/7/99
7/9/1999
ECOFIN 1/5/1998
2,5
3
3,5
4
4,5
5
5,5
3MO 6MO 1YR 2YR 3YR 4YR 5YR 6YR 7YR 8YR 9YR 10YR
ITA GOVT (BPT) 1/5/98 GER GOVT 1/5/98
ITA GOVT (BPT) 11/3/99 GER GOVT 11/3/99
9/4/1999
ECOFIN 1/5/1998
0
50
100
150
200
250
300
350
mar
-94
giu-9
4
set-9
4
dic-9
4
mar
-95
giu-9
5
set-9
5
dic-9
5
mar
-96
giu-9
6
set-9
6
dic-9
6
mar
-97
giu-9
7
set-9
7
dic-9
7
mar
-98
giu-9
8
set-9
8
dic-9
8
mar
-99
giu-9
9
NIKKEI 500 (JAP) DOW JONES INDUSTRIAL (US) FTSE EUROTOP 100 (EU)
Source: IRI - Economic Research Department / Bloomberg Financial Markets
Fig.3 - STOCK MARKETS GROWTH PERFORMANCES
0
50
100
150
200
250
300
FTSE 100 (UK) CAC 40 (FRA) DAX (GER)
MIBTEL (ITA) MADX (SPA)
Usa - Europe - JapanMajor European Markets
Fig.4 - KEY FIGURES OF EUROLAND(1998; billion US$)
Source: IRI - Economic Research Department / DRI Standard & Poors data
EU - 11 USA Japan
Population (million) 289 270 126
G D P 7012 8511 3782
Gross National Saving 1395 1481 1176
Government Bonds (*) 3812 6663 2821
Corporate Bonds (*) 1799 2955 906
Stock Market Capitalisation (*) 3764 11421 3894(UK included) (6084)
(*) 1997
Euro-denominated bond issuance ($ bn)
Fig.5 - THE RISE OF THE EURO CORPORATE BOND MARKET
Source: Bank of America
0
5
10
15
20
25
30
1995 1996 1997 1998 1Q 99
Other13%
AAA42%
AA24%
A21% A
29%
Other25%
AAA23%
AA23%
International Corporate Bond issues 1998
International Corporate Bond issues 1Q 1999
Fig.6 - THE EURO CORPORATE BOND MARKET
Rating features
Source: Bank of America
Fig.7 - EUROPEAN FUND MANAGEMENT INDUSTRY(1997; billion US$)
Source: IRI - Economic Research Department / Bank for International Settlements, 68th Annual Report.
Total Insurance Pension Insurance (%) Pension (%)
Germany 1263 690 65 508 55 5 40France 868 581 72 215 67 8 25Holland 667 243 362 62 36 54 9Italy 190 100 43 47 53 23 25Spain 167 107 13 47 64 8 28Belgium 160 17 7 136 11 4 85Ireland 111 18 6 87 16 5 78Portugal 100 3 2 95 3 2 95Finland 100 8 7 85 8 7 85Austria 89 1 3 85 1 3 96EMU 11 3715 1768 580 1367 48 16 37
Other non-EMU 2606 1091 1219 296 42 47 11
Europe 6321 2859 1799 1663 45 28 26
US 13467 3624 5642 4202 27 42 31Japan 3346 2323 525 499 69 16 15Rest of world 600 284 179 137 47 30 23
Total 23734 9090 8144 6500 38 34 28
Retail (%)Country Retail
Source: Rapporto IRS sul mercato azionario, 1999
Fig.8 - HOUSEHOLDS’ FINANCIAL ASSETS Share (in %) managed by institutional investors (1997)
53
43,6
33,830,5 28,2
24,5
0
10
20
30
40
50
60
UK USA Japan Germany France Italy
Fig.9 - COMPANIES’ CAPITAL STRUCTURE Usa, Japan, Euroland (1998)
Source: projections IRI - Economic Research Department on National Accounts.
USA
23%
48%
29%
Corporate bonds Equity Bank debt
Japan11%
20%
69%
Corporate bonds Equity Bank debt
Euroland10%
28%
62%
Corporate bonds Equity Bank debt
Fig.10 - MODELS OF EXTERNAL CAPITAL MARKETS
Source: M.E.Porter in K.Ohmae (ed.),”The Evolving Global Economy”, (1998)
Dedicatedcapital
Orientedto stable
relationships
Concentratedshareholdings
Sell or Buy decisions relatively
independent from speculative
Stableshareholders
Externalinformation
Fluidcapital
Orientedto transactions
Fragmentedshareholdings
SpeculativeSell or Buy
decisions
Non-stableshareholders
Non influentialshareholders
Insideinformation
Anglo Saxon Model(Usa - UK)
Renan Model(Ger - Jap)
Influentialshareholders
Bidder Contestfor the 5 th
Operator's LicenceOperator's Licence
Bidder Contestfor the 4 th
Operator's Licence
Bidder Contestfor the 3 rd
Operator's Licence
Bidder Contestfor the 2 nd
OMNITEL(OLIVETTI)
(Winner)
UNITEL(Bidder)
WIND(Winner)
PICIENNE(Bidder)
TELON(Bidder)
ENEL 51% DEUTSCHE TELEKOM 24,5% FRANCE TELECOM 24,5%
BRITISH . TELECOM MEDIASET ENI-ITALGAS BNL INA (NOR) TELENOR
AUTOSTRADE 27% BELL CANADA 27% (HK) DISTACOM 22% COFIRI 7,5% UNICREDITO 7% ALTRI 9,5%
TIM(TELECOM ITALIA)
(Incumbent)
TELECOM ITALIA 60,3% IMI-S.PAOLO 2,4% B.D'ITALIA 1,8% EUROCASSE SIM 1,3%(GIA) NOMURA INT.1,1% SOGERSEL 0,8%(USA) TIIACREFINV.0,8%(USA) THE ROYAL B. 0,7%
(*)
OLIMAN [OLIVETTI 75% => 50,1% (GER) MANNESMANN 25% => 49,9%]
(USA) BELL ATLANTIC
(*)
FININVEST
BLUTEL(Winner)
1 st Operator
PLANETWORK(Bidder)
To be launchedin Dec.99
AUTOSTRADE SPA 28% BRITISH TELECOM 21% DISTACOM 10% ED.HOLDING (Benetton) 10% MEDIASET 10% BNL 7% ITALGAS (Eni) 7%
CALTAGIRONE 7%
ORSI CARBONE KPN (OLA)
(*) Ownership structure before Telecom take-over by OlivettiSource: IRI - Economic Research Department / Ministry of Communications (updated march 1999)(*) Ownership structure before Telecom take-over by OlivettiSource: IRI - Economic Research Department / Ministry of Communications (updated march 1999)
Fig.11 - MOBILE NETWORK OPERATORS IN ITALY
The map of existing licenses
National
Local
2
INFOSTRADA1
TELECOMITALIA
3
ALBACOM4
WIND6
NUOVA SOCIETA'DI TELECOM.
7
AUTOSTRADETELECOM.
5RSL COM ITALIA
8WORLDCOM (USA)
9COLT
TELECOM
(Milano 10020) (Milano)
10TELEGLOB
EITALIA
11TISCALI
15HERMES EUROPE
RAILTEL
14GLOBAL
ONE
COMM.
13SKIPPER
TELECOM.
12CITYTEL
16UNISOURCE
CARRIER
SERVICES(Mi-Pa-Tp-Rm) (Mi-Rm-Bo-Pd) (Mi-To-Rm)(Milano) (Milano)(Sar-Mi-Rm) (7 città)
27TELECOMPLUS INT.
(Lazio)
OLIMAN [OLIVETTI 75% => 50,1% MANNESMANN (GER) 25% => 49,9%]
FF.SS.
(*)
JOINT VENTUREBRITISH TELECOM-BNL 45,5%MEDIASET 15%ENI-SNAM 35%Others 4,5%
ENEL 51%DEUTSCHE TELEKOM 24,5%FRANCE TELECOM 24,5%
MIN.TESORO 3,4% B.CA D'ITALIA 2,3% IMPIEGATI 2,2% (USA) NOMURA INT. 1,8% IMI-FIDEURAM 1,8% (USA) JANUS CAPITAL 0,8% FONDIGEST 0,8% (USA) CAPITAL RISK 0,6% (*)
RSL COM USA
[METRO HOLDINGS OF SWITZERLAND 12,0%BUKFENC 5,5%CORAL GATE 5,3%TARLOVSKY 3,5%BILDIRICI 2,1%]
SNAM-ENI AUTOSTRADE SpA
[IRI 86%]
(UK) COLT.INC. 25,3%(USA) FIDELITY INV. 21,1%(USA) BANK OF NY 16,0%(USA) FIDELITY INTL. 4,7%(USA) THE CAPITAL GROUP COMPANIES I. 3,4%
SORU 90%KIWI 10% (Piol e Novick)
TELEGLOBECANADA [BCE 24% SIROIS 17% Others 59%]
DURANTE DEUTSCHE TELEKOM 33,3% FRANCE TELECOM 33,3%SPRINT 33,3%
GLOBALTELESYSTEMS 50%HIT RAIL 50%
KPN (OlA) 33,3%SWISSCOM 33,3%TELIA 33,3%
AEMCOLT TELECOM (UK)
1055 10681077 1073
30S.I.T.
29FCI
CARRIER SERVICES
(USA) FIDELITY 8,1%(USA) ALLIANCE 3,3%(UK) BARCLAYS B. 2,9%(USA) BANKERS T. 1,6%(USA) TIAA-CREF 1,5%(USA) AM.CE.CO. 1,4%(USA) THE VANG.G. 1,4%
17SWISSCOM
S.p.A
(Mi)
(Mi-Rm-Pa) (11 città)
28LONG
DISTANCE INT.LTD
18CABLE &
WIRELESS
19TELEFONICA
(7 città) (Mi-To-Rm-Na)
22WORLDLINK
S.P.A.
21TRANSWORLD
COM.
20PLANETWORK
IT.
23T.M.I.
(28 città)(10 città) (Mi-Rm-Ge-Na)
25MED 1 ITALY
26S.M.T.
24SPAL
TELECOMMU-NICATIONS (Mazara del
Vallo) (Roma)(30 città)
31ONIONITALIA
(9 città)
32VIATEL GLOBALCOMM.
33SISTER
S.p.A.
(26 città) (Imola)
(UK) CABLE & W. 52,6%(USA) NINEX CO. 18,5%(CAN) BELL CAN. 14,2%(UK) MERCURY A.
SWISS CONF. 51,5%
(SPA) B.BILBAO V. 6,9%(SPA) ARGENTARIA 5,2%(SPA) CAJA DE AHORROS Y PENSIONES DE BARCELONA 5,0%(SPA) B.SANTANDER 2,0%
(Mi-Rm-To)
(5 città)
(*) Ownership structure before Telecom take-over by OlivettiSource: IRI - Economic Research Department / Ministry of Communications (updated march 1999)
Fig.12 - FIXED NETWORK OPERATORS IN ITALY
The map of existing licenses
Fig.13a - PRIVATISATIONS’ PROCEEDS BY TYPE OF OFFERING
(Five major European countries, U$ billion, 1981-98)
Source: IRI - Economic Research department / IFR-Thomson Privatisation International
135.3
18.4
59.9
22.7
63.1
1.6
21.4
23.0
38.2
4.5
0
20
40
60
80
100
120
140
160
UK Italy France Germany Spain
Public Offers Private Sales
Fig.13b - PRIVATISATIONS IN EUROPE(Five major European countries, 1992-98)
Source: IRI - Economic Research Department / IFR-Thomson Privatisation International
FINANCIAL TECHNIQUES USED
Million US$
(1998 prices) Public Offers % Private Sales % Total %
FRANCE 49,453 26,6 1,452 2,4 50,905 20,6
GERMANY 17,971 9,7 20,995 34,3 38,966 15,8
ITALY 57,267 30,8 21,987 35,9 79,254 32,1
SPAIN 36,572 19,7 4,336 7,1 40,908 16,6
UNITED KINGDOM 24,381 13,1 12,418 20,3 36,799 14,9
TOTAL EUR-5 185,644 100 61,188 100 246,832 100
(in %) (75,6%) (24,4%) (100%)
Fig.14 - EVOLUTION OF THE ITALIANREGULATORY FRAMEWORK
Law 359/1992 CIPE 30.12.92 CIPE 15.10.93 Law 474/1994 Law 481/1995
Iri, Eni, Ina, Eneltrasformed in s.p.a. (p.l.c.)
Determination of net assets and eva- luation procedures
Share conferred to Treasury
Power to Trea- sury for the pre- paration of a Reorganisation plan
Start-up of proce- dures for dismis- sal of entire hol- ding in Enel, Ina, Comit, Imi, Credit, Stet, Agip
Setting up of the Privatisations Commitee
Acceleration of procedures for Credit, Comit e Imi
Regulation of privatisation procedures: * public offers * public tenders * private sales
Discipline of pro- cedures for: * determination of participation value * selection of Advisor and Global Coord.
Possibility of: * Special powers * List vote and limits to share ownership * Partly Paid * Authorities for public utilities
Obligation, in case of legal or effective control on a company pri- vatised through public offer, of: * making public parasocial agreements * launching public offers
Setting up of Authorities for Tlc, Gas & Electricity
Obligation for the Government to define moda- lities for public utilities’ privatisa- tion and conse- quent expression of an advice by Parliament
Gvmt decree: redefines the perime- ter of application of L.474; special tem- porary powers main- tained only for pu- blic order, health, defence
New law proposal: powers to the Government for: * Privatisations’ regulation reordering * Acceleration of dismissal processes
Measures supported by EU Commission which opposes the Golden Share’s use except extraordi- nary cases
Gvmt Decree(may 1999)\
Fig.15a - Italy: equity base by typology of investors
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Foreign
Capital
24%
Domestic
Capital
76%
Market
33%
Institutional
Investors
37%
CGSS
30%
INSURANCE 31%
PENSION FUNDS 7%
MUTUAL FUNDS 62%
BANKS 40%
MUTUAL FUNDS 30%
INDUSTRY 13%
INSURANCE 17%
Source: projections IRI - Economic Research Department on Technimetrics/Bloomberg Financial Markets data (April 1999)
Fig.15b - France: equity base by typology of investors
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Foreign
Capital
24%
Domestic
Capital
76%
Market
37%
Institutional
Investors
25%
CGSS
(noyau dur)
38%
INSURANCE 63%
PENSION FUNDS 8%
MUTUAL FUNDS 28%
BANKS 16%
MUTUAL FUNDS 29%
INDUSTRY16%
INSURANCE 30%
EMPLOYEES 9%
Source: projections IRI - Economic Research Department on Technimetrics/Bloomberg Financial Markets data (April 1999)
Fig.16a - PRIVATISATIONS’ CONTRIBUTIONTO THE ITALIAN STOCK MARKET GROWTH
(January 1993 - August 1999)
Source: IRI - Economic Research Department 1999
STOCK MARKET CAPITALISATION COMIT DAILY EXCHANGES ON CAPITALISATION (in % of GDP) INDEX THE STOCK MARKET
2.1.1993 116 Bil. US$ 11.2% 451 276 Mil. US$ (average ‘93)
27.8.1999 586 Bil. US$ 50.3% 1507 2,100 Mil. US$ (average ‘98)
Italian stock market still relatively limited, but capable of further significant development (Ita 37% of 1998 GDP; Ger 44%, Fra 57%, Spa 61%, Gbr 155%; Jap 56%; USA 113%)
Recent estimastes by CONSOB: Number of companies potentially able to be listed: 450/550 Capitalisation potential: at least 106 billion US$ (19% of present capitalisation)
Fig.16b - PRIVATISATIONS’ CONTRIBUTIONTO THE ITALIAN STOCK MARKET GROWTH
(January 1993 - August 1999)
Source: IRI - Economic Research Department 1999 / Consob, Annual Report 1997
CONTRIBUTION OF ITALIAN PRIVATISATIONS 51.8% of 1/1/93 capitalisation 10.2% the present capitalisation
CONTRIBUTION OF IRI PRIVATISATIONS 20.9% of 1/1/93 capitalisation 4.1% of present capitalisation
Fig.17 - THE ITALIAN STOCK MARKET(ROE - Long term interest rate Spread)
Source: IRI - Economic Research Department / Euromobiliare
-10,0
-5,0
0,0
5,0
10,0
15,0
1993 1994 1995 1996 1997 1998 1999* 2000*
ROE Long term interest rate Spread
* expected
%
Fig.18a - THE HIT PARADE OF INTERNATIONAL STOCK MARKETS(Capitalisation and number of listed companies)
5,068
3,525
3561,433
1,097
243
276 268
425
Source: International Federation of Stock Exchanges
680
Number of listed companies Market capitalisation
0
500
1,000
1,500
2,000
2,500
3,000
NYSE
Nasda
q
Tokyo
Lond
on
Frank
furt
Paris
Zurich
Amste
rdam
Mila
no
Toron
to
Mad
rid
Hong
Kong
Stock
holm
Bruss
els
2,669
1,8902,423
484
10,271
Billion US$ - December 1998
29,1
10,7
6,23,4 2,5 2,1 0,9
0
5
10
15
20
25
30
35
USA UK Germany Japan France Italy Spain
Fig.18b - STOCK EXCHANGES’ DAILY TURNOVER(billion $, average 1998)
Source: Rapporto IRS sul mercato azionario, 1999
0
2000
4000
6000
8000
10000
12000
14000
0
1000
2000
3000
4000
5000
6000
7000
Volume (mln. of shares) UKX Index
0
100
200
300
400
500
600
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Volume (mln. of shares) CAC Index
0
5000
10000
15000
20000
25000
0
5000
10000
15000
20000
25000
30000
Volume (mln. of shares) MIBTEL Index
Fig.18c- MAJOR EUROPEAN STOCK EXCHANGESPrice trends and daily turnover (mln. of shares)*
* lhs: monthly turnover; rhs: prices indexSource: IRI - Economic Research Department / Bloomberg Financial Markets
0
200
400
600
800
1000
1200
1400
1600
1800
31/0
1/94
31/0
3/94
31/0
5/94
29/0
7/94
30/0
9/94
30/1
1/94
31/0
1/95
31/0
3/95
31/0
5/95
31/0
7/95
29/0
9/95
30/1
1/95
31/0
1/96
29/0
3/96
31/0
5/96
31/0
7/96
30/0
9/96
29/1
1/96
31/0
1/97
31/0
3/97
30/0
5/97
31/0
7/97
30/0
9/97
28/1
1/97
30/0
1/98
31/0
3/98
29/0
5/98
31/0
7/98
30/0
9/98
30/1
1/98
29/0
1/99
31/0
3/99
31/0
5/99
30/0
7/99
0
1000
2000
3000
4000
5000
6000
7000
Volume (mln. of shares) DAX Index
31/0
1/94
31/0
3/94
31/0
5/94
29/0
7/94
30/0
9/94
30/1
1/94
31/0
1/95
31/0
3/95
31/0
5/95
31/0
7/95
29/0
9/95
30/1
1/95
31/0
1/96
29/0
3/96
31/0
5/96
31/0
7/96
30/0
9/96
29/1
1/96
31/0
1/97
31/0
3/97
30/0
5/97
31/0
7/97
30/0
9/97
28/1
1/97
30/0
1/98
31/0
3/98
29/0
5/98
31/0
7/98
30/0
9/98
30/1
1/98
29/0
1/99
31/0
3/99
31/0
5/99
30/0
7/99
31/0
1/94
31/0
3/94
31/0
5/94
29/0
7/94
30/0
9/94
30/1
1/94
31/0
1/95
31/0
3/95
31/0
5/95
31/0
7/95
29/0
9/95
30/1
1/95
31/0
1/96
29/0
3/96
31/0
5/96
31/0
7/96
30/0
9/96
29/1
1/96
31/0
1/97
31/0
3/97
30/0
5/97
31/0
7/97
30/0
9/97
28/1
1/97
30/0
1/98
31/0
3/98
29/0
5/98
31/0
7/98
30/0
9/98
30/1
1/98
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1/99
31/0
3/99
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5/99
30/0
7/99
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1/94
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3/94
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5/94
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30/0
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1/94
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1/95
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5/95
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9/95
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1/95
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1/96
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1/97
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3/97
30/0
5/97
31/0
7/97
30/0
9/97
28/1
1/97
30/0
1/98
31/0
3/98
29/0
5/98
31/0
7/98
30/0
9/98
30/1
1/98
29/0
1/99
31/0
3/99
31/0
5/99
30/0
7/99
Fig.19 - PRIVATISATIONS IN ITALY (1992 - 98)
The role of IRI
Source: IRI - Economic Research Department / IFR-Thomson Privatisation International
0
10
20
30
40
50
TREASURY IRI OTHERS
Public offers Private sales
5,817
17,972
37,530 13,865
1,765
2,305
Million US$ (1998 prices)
Source: IRI Spa
Fig.20 - IRI GROUP PRIVATISATIONS (1992-98)
(million U$, 1998 prices)
* Minority shares and real estate assets
Privatisations Debts Others * Dismissals Total
(A) (B) (C) (D=A+C) (E=A+B+C)
IRI S.p.A.
Total 1992-98 20,819 9,538 2,099 22,918 32,456
SECTOR HOLDINGS
Total 1992-98 3,240 1,713 5,679 8,919 10,632
IRI GROUP (TOTAL)
Total 1992-98 24,059 11,251 7,778 31,837 43,088
Fig.21 - IRI GROUP PRIVATISATIONS (1992-98)
(Million US$, 1998 prices)
Source: IRI - Economic Research Department
Debts
Others Privatisations
Sector
Holdings
IRI Spa
Privatisations Debts Others Sector Holdings IRI Spa
7,77824,059
11,251 32,456
10,632
Source: IRI’s Administration and Accounting Department
Fig.22 - IRI Spa: PROFITABILITY PERFORMANCE(Million $)
* Net of extraordinary revenue items
-3,440
-2,767
-3,501
-5,886
-730
-846
-648
-199
-1,544
106
-302
2,977
-20
1,818
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
1992 1993 1994 1995 1996 1997 1998
Operating Income* Net Income
Fig.23 - THE MIXED MODEL - PRIVATISATIONS IN THE PIPELINE
The competitors for the hard core
Present stock
market capitalisation
889 mil Euro *
AEROPORTI
DI ROMA S.p.A
AUTOSTRADE S.p.A
ED HOLDING (BENETTON) 16%
• Fondazione Crt 4%• Unicredito 2%• Ina 2% • Acesa (Autos. Catalane) 4%• Felsinea (Guidalb.Guidi & C.) 2%
ED HOLDING (BENETTON) 16%
• Fondazione Crt 4%• Unicredito 2%• Ina 2% • Acesa (Autos. Catalane) 4%• Felsinea (Guidalb.Guidi & C.) 2%
56% public offer
14% already on
the stock market
45,8% already on
the stock market
51,2% hard core
30%hard core
• GRUPPO CIR
(De Benedetti)
• British Airports
Authority (Gbr)
• Banca di Roma
• GEMINA
• Falck• Impregilo• BC Partners• Italpetroli• Mc Donald’s
• HERMES
• Ed. Holding (Benetton)• Pirelli• Caltagirone• San Paolo IMI• Ras
• ABN Amro (Neth)• Schiphol
(Amsterdam Airport) (Neth)
• Frankfurt Airport (Ger)
• B.Pop.Milano
• DOUGHTY HANSON (Gbr)
• DOUGHTY HANSON (Gbr)
• BARCLAYS (Gbr)
• BARCLAYS (Gbr)
• MC DONALD’S• MC DONALD’S
• ITT - Sheraton (Usa)• ITT - Sheraton (Usa)
• AUTOS. TO-MI (Gavio)• AUTOS. TO-MI (Gavio)
• BRISA (Portuguese Highways)• BRISA (Portuguese Highways)
• MACQUARIE (Bank) (Asl)• MACQUARIE (Bank) (Asl)
Present stock
market capitalisation
4.526 mil Euro *
3% local authorities
• SEA (Milano’s airports)
* 4 Sep.1999 - Source: various press releases and articles. IRI has not yet officially announced the names of bidders. Interest for AdR has been expressed by 5 groups of investors and 11 single entities; for Autostrade preliminary offers by 2 groups of investors and 4 single entities.
STREAM FINSIEL ITALTELSIRTI
TELECOM ITALIA
TIM
TelecomItalia Mobile
Nuova
Telespazio
STET
International
50%77,2% 52% 100% 100% 88% 60,4%
12%
Telecommunication Services I.T.
(Software & Systems)
Manufacturing and Equipment Multimedia
Fig.24 - THE PRIVATISATION OF TELECOM ITALIA (Oct. 1997)
The Group at a Glance
Net sales US$ 26.2 Bn
Operating income US$ 5.3 Bn
Net income US$ 2.2 Bn
Shareholder equity US$ 21.5 Bn
Long term debt US$ 5.6 Bn
Fig.25 - THE PRIVATISATION OF TELECOM ITALIA (Oct. 1997) Key figures - 1998
Ina0,5
Alleanza0,4
Imi0,75
Credito Italiano0,7
Credit Suisse Group0,67
Generali0,6
Compagnia S.Paolo
0,6
Ifil0,6
Comit0,5
Fondazione Cariplo
0,5
Montepaschi0,5
Rolo Banca0,3
Fig.26 - PRIVATISATION OF TELECOM ITALIA (Oct. 1997) Core Group of Stable Shareholders (6,6% of share capital)
Foreign investors53%
Market retail21%
Italian investors26%
Fig.27 - PRIVATISATION OF TELECOM ITALIA Shareholder Structure pre-tender (March 1999)
(*) It was 6,6% in Oct.1997, at the moment of the privatisation
Imi - S. Paolo 1,4%
Generali 1,1%
Ina 0,9%
Credit Suisse (SVI) 0,7%
Unicredito Italiano 0,7%
Alleanza 0,6%
Ifil 0,6%
Banca Intesa 0,5%
Comit 0,5%
Mps 0,5%
Rolo 0,3%
Total (*) 7,8%
CGSS
State Street (USA) 1,9%
Nomura (GIA) 1,8%
Merrill Lynch (USA) 1,1%
Bankers Trust (USA) 1,0%
F&F Deutsche B. (GER) 0,8%
Credit Suisse (SVI) 0,7%
Calpers (USA) 0,7%
Janus (USA) 0,5%
Standard Life (USA) 0,4%
Bernstein (USA) 0,4%
TIAA Inv. (USA) 0,3%
Rowe (USA) 0,3%
Schroder (USA) 0,3%
Santander (SPA) 0,3%
Others 42,6%
N.foreign funds (1335)
Foreign institutional investors
Treasury 3,5%
Bank of Italy 2,3%
Employees 2,2%
Core group
shareholders 7,1%
Others 10,9%
N.italian funds (99)
Italian Istitutional investors
Fig.28 - PRIVATISATION OF TELECOM ITALIA (Oct.1997)The Core Group of Stable Shareholders (CGSS) - A SWOT analysis
Golden Share: potential fall back to public ownership
The pathology of contendibility
THREATS
STRENGTHS
• Board representation: the switch from public capital to private capital dominance
• Gradual introduction of private management methods and styles
Golden Share: it made possible privatisation of
large public utilities
WEAKNESSES
• CGSS relatively small and fragmented• Weakness of alliances• Lack of hierarchy in CGSS• Negative impact of CGSS on foreign stakeholders
due to cultural gap• Potential conflict among Board members
Golden Share: reduced presence of foreign shareholders
Golden Share: more open attitude to internationalisation and globalisation
The physiology of contendibility
OPPORTUNITIESContendibility
Golden Share Golden Share
(a) Assuming all Tecnost minority shareholders participate in the rights issue
Tecnost Minority
shareholders (a)2.4%
27.1%
70.5%
51.02%
48.98%
Telecom Italia tendering
shareholders
Olivetti
Tecnost
Telecom ItaliaTelecom Italia
non-tenderingshareholders
Fig.29 - OLIVETTI’S TENDER OFFER Post-tender Shareholder Structure of Telecom Italia
Olivettishareholders
Telecom Italia tendering
shareholders
Olivetti
BanksTecnost
7.9 Euro bnProceeds from Sale of Oliman
Mannesman
2.6 Euro bnRights Issue12 Euro bn
Rights Issue
18.5 Euro bnRights Issue
6.5 Euro bnSyndacated loan
Fig.30 - OLIVETTI’S TENDER OFFER The cash component