MILAN Unfazed by Italy's gloomier economic outlook, China's cash-rich central bank is snapping up stakes in high-profile Italian companies and has invested around 3 billion euros in blue-chip firms as it seeks to diversify beyond government debt.
Filings from stock market watchdog Consob showed on Friday that the People's Bank of China now owns 2.014 percent of Generali (GASI.MI), Italy's biggest insurer and Europe's third-largest sector player by market capitalization. The stake is worth 471 million euros at current market prices.
The purchase comes in spite of quarterly economic data that showed Italy had slipped back into a recession and that sparked a sell-off in domestic stocks and bonds earlier this week.
Filings released on Monday revealed the Chinese central bank had also acquired stakes of around two percent in Italy's biggest carmaker Fiat FIA.MI, top domestic telecoms operator Telecom Italia (TLIT.MI) and Prysmian (PRY.MI), the world's biggest cable-maker.
In March, the central bank had bought similar stakes in leading oil and gas operator Eni (ENI.MI) - an investment worth 1.3 billion euros - and domestic utility giant Enel (ENEI.MI).
"Rather than sticking to low-yielding Italian government bonds, the Chinese are looking to diversify their investments, with a focus on high-profile companies with global footprint," said Marco Valli, Chief Eurozone Economist at UniCredit.
Contrary to other Asian central banks, the People Bank's of China had continued to invest in Italian state debt - albeit at shorter maturities - even at the peak of the euro zone crisis. But a fall in Italian government bond yields to record lows earlier this year has made these assets less attractive.
It was not immediately possible to contact the People's Bank of China for more details about its Italian investments.
Italian companies have been the target of 35 deals or acquisitions since 2009, nearly 10 percent of all Chinese transactions with European companies over the past five years, according to Rothschild data.
These purchases, which involve a number of Chinese players, have increasingly grown in size and importance.
In one of the biggest deals this year, Italy's state lender Cassa Depositi e Prestiti last month entered an agreement with China's State Grid to sell a 35 percent of energy grid holding company CDP Reti for at least 2.1 billion euros ($2.8 billion).
In May, Shanghai Electric Group (601727.SS) agreed to buy a 40 percent stake in power engineering company Ansaldo Energia from Italian state fund FSI in a deal worth 400 million euros
"Italy is currently an attractive investment center," said Alessandro Daffina, Chief Executive Officer of Rothschild Italy.
"Chinese investors see it as an ideal gateway to the European market. They also value Italy's reputation, expertise and the quality of its products in sectors ranging from luxury goods to technology, " said Daffina, who was one of the adviser on the Ansaldo Energia deal.
Yet, Italy still lags other European countries in terms of Chinese investments.
According to Rothschild data, of the some 50 billion euros that Chinese companies have invested in Europe over the past five year, nearly a quarter went to Britain alone, with Italy representing only 8 percent of total Chinese investments.
(Reporting by Lisa Jucca, editing by David Evans)