Activist hedge fund TCI challenges Italian government over motorway operator sale

Autostrada toll booth

Activist hedge fund TCI Fund Management is challenging Italy’s government over the sale of a motorways unit held by Atlantia, the Rome-headquartered infrastructure group which managed the Morandi Bridge that collapsed in Genoa in 2018, killing 43 people.

In a letter to the Italian treasury this week, Sir Christopher Hohn, head of the high-profile London-based hedge fund, alleged the Italian government’s “illegal actions” over the sale have caused “significant losses to international investors.”

According to TCI, Atlantia was forced by the government to either sell its stake in Autostrade per l’Italia, which manages motorways in Italy under concession, to state-run development bank Cassa Depositi e Prestiti, or have the concession revoked, leading to “lengthy and uncertain” litigation proceedings.

Atlantia, which operates toll motorways and airports across Europe, recently agreed a deal to offload its stake in ASPI to the Cassa Depositi e Prestiti. The arrangement allows ASPI to continue to operate Italy’s motorway concession.

But TCI believes it will be “impossible” for shareholders to get a fair market value for their ASPI stakes.

“The expropriation of Atlantia’s stake in ASPI is illegal,” Hohn said, adding Rome’s actions “repeatedly violated” legal principles and expectations under Italian and EU law, “dramatically” impacting its investment in Atlantia.

Instead, TCI – which has more than 1 per cent of Atlantia shares, and exposure to over 5 per cent of its equity in swaps – is proposing an alternative plan to spin off ASPI as a listed company held by existing Atlantia shareholders. 

Such a move would allow Cassa Depositi e Prestiti to make a tender offer for ASPI’s stock at a price determined by the market.

The USD30 billion London-based hedge fund filed a complaint with the European Commission over the matter this week, and expects a formal investigation into the Italian government’s handling of the issue.

The fatal Morandi bridge disaster flagged up a range of management and operational issues at its operator ASPI, leading to pressure in Italy to remove the motorway concession from Atlantia.

The Milan-listed motorway and airport-focused Atlantia is 30 per cent owned by the high-profile Benetton family, best known for its United Colors of Benetton fashion brand.