GIP Italo Deal Shows Trust Before Italian Vote, Montezemolo Says

(Bloomberg) -- Global Infrastructure Partners’ surprise bid for Italian high-speed train operator Italo shows international investors expect the country’s economic recovery to continue regardless of next month’s election outcome, the rail company’s chairman Luca Cordero Di Montezemolo said.

New York-based fund GIP “investing huge amount of money” with its offer for Italo-Nuovo Trasporto Viaggiatori SpA means “they believe in Italy,” Montezemolo said on Monday in an interview with Bloomberg Television. “The economy is doing very well” and “I don’t think the election will affect the growth” that has been marked by increasingly rising exports, he said.

Italo, founded by Montezemolo and others in 2006, had planned an initial public offering before GIP stepped in with its bid.  In the interview, Montezemolo said that he didn’t have any contacts with GIP before its offer was made.

Italo eventually accepted last week a sweetened takeover bid from the investment fund worth 1.98 billion-euro ($2.42 billion), compared with a previous offer of 1.9 billion euros.

The deal allows GIP to add Italo to a $40 billion asset portfolio that includes the Port of Melbourne. The Rome-based train service, which carried more than 13 million passengers last year, is controlled by investors who also include Italy’s biggest bank, Intesa Sanpaolo SpA, insurer Assicurazioni Generali SpA, Tod’s SpA co-founder Diego Della Valle. Montezemolo, who led Ferrari for more than 20 years, has also served as chairman of Alitalia SpA.

GIP is valuing Italo’s equity at 1.94 billion euros. The railway’s current investors will also receive 30 million euros of dividends approved last month, and the buyer will assume 10 million euros of costs to halt the IPO process, Italo said. That brings the total value of the transaction to 1.98 billion euros, it said.

Italy’s general elections scheduled on March 4 are likely to produce a hung parliament as no party or coalition is forecast to obtain an outright majority, pollsters’ projection show. That could require a new vote later this year with the current government led by Prime Minister Paolo Gentiloni remaining in power in the meantime.

“I hope of course that we have stability after the election and I hope that there could be a winner,” Montezemolo, 70, also said. “But at the end of the day, I think that Italy has always been able to solve the problems, maybe at the last moment.”

--With assistance from Flavia Rotondi

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Kevin Costelloe, Dan Liefgreen

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