By Giuseppe Fonte and Francesca Landini
ROME (Reuters) – Italy is in talks with sovereign wealth funds (SWFs) from Norway, Saudi Arabia and Singapore over plans worth 1 billion euros ($1.09 billion) to develop a residential area of Milan, the head of a state-owned company told Reuters on Thursday.
The initiative comes amid efforts by Prime Minister Giorgia Meloni’s administration to forge closer ties with Gulf states and generally make Italy more attractive to foreign investors.
Invimit, an asset-management company run by the Treasury, is seeking partners to invest 650 million euros to regenerate a run-down 388,000 square metre site in the western suburbs of Milan with a combination of housing and what will be the second largest park in the city of 1.4 million.
The site’s value at the end of the planned investment is estimated at 1 billion euros and it is expected to yield returns of around 15%, Invimit CEO Giovanna Della Posta said.
The company is in talks with global private equity firms focused on real estate as well as the SWFs, she said.
In all, Invimit has granted 20 potential investors access to confidential data and others are expected to join “as they are already negotiating non-disclosure agreements with us,” the CEO added.
To lure additional market players, Invimit extended until Sept. 30 from July 24 a deadline for expressions of interest.
Milan will continue to attract big national and international investors, think tank Scenari Immobiliari has said, adding the financial capital of Italy is expected to record a 5.1 million square meter increase in its potential building space and 6% average price rise this year.
Invimit will launch a fund whose stakes will be sold to one or more investors, with the state as a minority investor.
“The deal is specifically structured for both domestic and foreign capital,” Della Posta said.
The government is also courting SWFs to invest in a separate, state-backed fund to support firms operating in strategic sectors, including energy and procurement of raw materials, Reuters reported in May.
Data from Milan’s Bocconi University Sovereign Investment Lab shows that money from Middle East SWFs into Italy peaked in 2010 at $2.3 billion in terms of deal value. Over the past five years, they have put in barely $1 billion.
($1 = 0.9189 euros)
(Additional reporting by Elisa Anzolin; editing by John Stonestreet, Alexandra Hudson)
