Italian banks UniCredit and Intesa Sanpaolo said they were selling their combined 11.5 per cent stake in the London Stock Exchange (LSE) , as they both move to shed non-core assets and strengthen capital.
In separate statements on Tuesday, UniCredit and Intesa said they would place their respective stakes with institutional investors. UniCredit has 6.1 per cent and Intesa 5.4 per cent of the LSE, which bought the Milan bourse in 2007, making them the LSE’s third and fourth biggest shareholders.
“It was a non-strategic asset for both banks,” said one source close to the situation.
The banks are offering their shares at between 960 pence and 1,000 pence per share, according to a term sheet for the deal seen by Reuters. That is a discount of between 1.7 per cent and 5.6 per cent to Tuesday’s closing share price of 1,017 pence.
At the top of that range, UniCredit’s stake is worth around £165-million and Intesa’s around £146-million. LSE’s shares have lost 9.2 per cent over the past month, but are up 21.9 per cent over six months.
“LSE’s shares have had a decent run recently, which the banks are probably hoping to capitalize on,” said Richard Perrott, an analyst at Berenberg Bank.
“There may be some short-term pressure on the share price, but the sales will increase the free float, which is probably a good thing.”
Increasing the number of shares available for trading boosts the liquidity of a stock and makes it more attractive to investors.
With the euro zone’s debt crisis eating away at their profits and their capital base, Italian banks are retrenching on core businesses and shedding non-strategic assets to boost their financial strength.
But the exit from the LSE of Italy’s top two lenders also underscores the Italians’ diminishing influence in the combined entity, which at the time had been hailed as creating strong synergies.
Earlier this year the head of Italy’s market regulator Consob said the takeover of Borsa Italiana by the LSE “has not fulfilled expectations either in Italy or London” in terms of stimulating cross-border capital flows or increased investment in Italian companies.
The LSE’s leading investors are Borse Dubai Limited, with 20.6 per cent, and the Qatar Investment Authority, with 15.1 per cent.
Morgan Stanley is acting as book runner on the sales for both banks.
The LSE declined to comment.