Italy Finance Minister sees Eni share buyback as good way to cut state's stake

By Giuseppe Fonte

ROME (Reuters) -Reducing Italy's stake in Eni thanks to the company's share buyback scheme is a good idea, Economy Minister Giancarlo Giorgetti said on Wednesday, raising the prospect of a plan that could cut public debt by some 2 billion euros ($2.19 billion).

Sources told Reuters this month that several investment banks had approached the Treasury with offers to help it sell part of its stake in the energy group.

They said Eni's buyback, which would not include the government's stock, would effectively boost Rome's stake, allowing it subsequently to sell down shares without losing full control.

"It's a proposal that makes sense. It's a good idea," Giorgetti told reporters in parliament.

Shares in Eni fell 0.6% following Giorgetti's remarks.

Italy aims to raise some 20 billion euros from asset disposals through 2026 to keep the euro zone's second-largest debt pile as a proportion of gross domestic product (GDP) in check.

The government currently owns around 32.4% of Eni, chiefly through the 27.7% it holds indirectly via state lender Cassa Depositi e Prestiti (CDP), as the Treasury has a small direct 4.7% stake.

Announced in May, Eni's buyback is in progress and is expected to increase the government's total stake to above 34% of voting shares.

Once completed, the Treasury could potentially sell enough shares for Italy to maintain slightly more than 30% of Eni's capital when factoring in the CDP's stake, the sources said.

At current market prices, 4% of Eni is worth more than 2 billion euros.

Eni's share buyback is expected to end before April 2024 after the group said last month it would speed up the programme, launched to reward investors.

Besides Eni, bailed-out bank Monte dei Paschi (MPS) tops the priority list of sell-off plans, as commitments Italy agreed with European Union competition authorities bind Rome to give up control of the lender.

Last week the Italian Treasury sold a 25% stake through an Accelerated Book Building (ABB) procedure, cutting its holding to 39% from 64%.

Giorgetti suggested last month Rome could also sell stakes in the state-owned railway Ferrovie dello Stato and its motorway network.

An option being studied by the Treasury is offering regulated returns to the railway group to woo private investors ahead of a listing, a separate source familiar with the matter said.

($1 = 0.9122 euros)

(Editing by Gavin Jones and Sharon Singleton)