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Fri December 06 2019

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Salini secures backing for 'Project Italy'

5 Aug Salini Impregilio has secured investment to support its plan to unblock stalled construction projects in Italy, consolidate the contracting sector and boost competitiveness in other countries.

Its proposals include taking control of key parts of ailing contractor Astaldi and creating a construction sector better able to compete against larger international competitors.

The company has signed two investment agreements, worth a combined €400m (£365m), aimed at developing Progetto Italia - or Project Italy - which it described as its proposal for preventing Italy’s infrastructure sector from running into serious trouble. Nearly every other major civil engineering company in the country is on the verge of bankruptcy, it said. The first step in the proposal is to become the majority shareholder in Italy’s ‘number 2’ contractor, Astaldi. This would save Astaldi from going bankrupt, said Salini. It added that would not be an acquisition outright, but rather an acquisition of the best parts of Astaldi, especially the choice projects in its portfolio.

The second step would have Salini Impregilo then acquire other selected works from top players in the sector in the same manner.

“The result would be the creation of a group with the scale and resources to help Italy build the infrastructure it needs as well as better compete for projects on the global market,” said the company. “It would also safeguard up to 400,000 jobs in the sector, most of which are founds in small- and medium-sized businesses that make up the supply chain.”

Salini Impregilo has reasoned that its foreign competitors are much bigger than it is. “Most of them have a strong presence in their home markets, giving them a solid foundation from which to compete for projects in other countries,” it said. “Indeed, 60% of the world’s top 250 builders get 75% of the revenue in their home markets. Salini Impregilo does not. It generates less than 10% of its revenue in Italy. Progetto Italia would change that, enabling Salini Impregilo, or in this case the new group, to create a more solid base from which to compete better abroad. Key to this is the unblocking of innumerable construction sites where work has been halted because of bureaucracy and other factors – about €36bn in total, each valued at more than €100m. It said that this represents an opportunity to strengthen Italy’s construction sector.

The new investment agreements represent a capital Increase by parent company Salini Costruttori for €50m, by CDP Equity for €250m and by a group of banks for an aggregate amount of €150m. The net proceeds of the capital increase will be used primarily to support Project Italy. In addition, Salini Impregilo has received a commitment from credit institutions to increase the financial flexibility of the new group.

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