Arpe stake in Fondiaria casts doubt on merger

Matteo Arpe, former chief executive of Italian bank Capitalia, and an allied investment fund have amassed a stake of almost 8 per cent in Fondiaria-SAI, throwing into doubt the Italian insurer’s planned merger with local rival Unipol.

The planned tie-up of Fondiaria-SAI and its parent company Premafin with Unipol has entranced the Italian business community since it was announced in January.

It involves a complex four-way merger through a series of capital increases worth about €2bn and is led by Mediobanca, the Milanese investment bank that has long been positioned as the guardian of the status quo in Italian finance.

The merger, which has already raised regulatory concern because an earlier mooted deal heavily penalised minority investors, will help shore up the debt-laden Premafin group through the capital increases while also allowing it to repay creditors, chief among them Mediobanca.

The role of Mediobanca as both principal and adviser in the deal and the effective bail-out of a group at the centre of Italian finance because of its cross-shareholdings in some of Italy’s most important financial institutions have raised the ire of minority investors while igniting concerns of corporate governance experts.

However, the move by Mr Arpe, now head of Sator, a private equity business, and financial fund Palladio, which is backed by a group of Venetian entrepreneurs, to amass a stake in Fondiaria-SAI adds uncertainty, according to analysts.

The shares have risen 150 per cent in the past five days amid speculation in the Italian media about the possible entry of new investors.

Declining to provide specific details of his intentions, Mr Arpe’s spokesman said Sator’s approach was “clearly supportive of Fondiaria-SAI, an important part of Italy’s financial fabric, and of its plans to raise new capital at this critical moment”.

In a separate statement, Palladio Finanziaria said it had increased its stake to more than 5 per cent in Fondiaria-SAI and had also agreed to ally itself with Sator through “a consultation pact”.

Cheuvreux analysts said the allied stakebuilding “could represent a challenge to the merger plan with Unipol, supported by main lender Mediobanca”.

However, Cheuvreux believes a more likely outcome was that the incoming investors would seek to pick up assets sold off by Unipol after the merger rather than aim to trigger a bid battle.

Premafin and UniCredit, other major creditors to the group, own a 42 per cent stake in Fondiaria-SAI. With Fondiaria-SAI having approved a €1.1bn capital increase to shore up its balance sheet after reporting a €1.1bn loss last year, the new investors would need to stump up at least €2bn to derail the merger.

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