Merrill Lynch gets Italian role

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The Independent Online
MERRILL LYNCH, the US brokerage house with a large operation in London, has been awarded the role of joint global co-ordinator in the privatisation of Italy's national electricity company, Ente Nazionale per l'Energia Elettrica (Enel).

Industry sources say the sale of the near-monopoly utility could be worth pounds 10bn, making it one of the most lucrative privatisations in Europe.

At the same time Kleinwort Benson, the British merchant bank, is understood to be advising the Italian government on the future structure of the country's electricity industry.

This week sees the start of the Italian privatisation programme, one of the largest attempted by any Western government, with the offer for sale to the public of 67 per cent of Credito Italiano.

Merrill Lynch will be acting with Italy's Mediobanca on the privatisation of Enel, which could take place towards the end of next year. It is likely that the government will sell Enel in two instalments or more, given the size of the sale.

Enel is a totally integrated electricity company. It carries out the equivalent combined functions in England and Wales of National Power, PowerGen, the National Grid Company and the 12 regional electricity supply companies.

The government is aware that Enel will be one of the trickiest privatisations, because of the potential effect on domestic electricity customers and industry.

Another obstacle to the sale is Enel's low profitability. After years of losses the company reached break-even in 1985. Last year the company made a net profit of 234 billion lire ( pounds 93m) on a turnover of 21,378bn lire.

The company, which employs more than 107,000 people, is also likely to have to make redundancies in preparation for the sale.