November 7, 2016 / 10:50 AM / in a year

UPDATE 1-Italgas promises higher dividends on its return to stock market

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MILAN, Nov 7 (Reuters) - Italy’s biggest gas distributor Italgas pledged to pay higher dividends as it returned to the Milan stock market on Monday after a 13-year absence.

Italgas, first traded in 1853 on the bourse in Turin and delisted from the Milan exchange in 2003 by oil company Eni , started trading at 4.062 euros per share giving it a market value of about 3.3 billion euros ($3.7 billion).

Italgas shares stood at 3.934 euros at 1033 GMT.

Italian gas company Snam spun off its domestic distribution business earlier this month as part of plans to focus on energy transmission and storage across Europe.

Snam, which distributed Italgas shares to its shareholders, has kept a 13.5 percent stake.

Speaking at the ceremony to mark the company’s bourse debut, Chief Executive Paolo Gallo said Italgas would increase its dividend by 2-3 percent per year in 2017 and 2018.

“From 2019, when we have a clearer picture of the gas concession situation, we might be able to remunerate shareholders more,” he said.

Italy’s gas distribution sector is highly fragmented but new rules cutting concession areas to just 177 from almost 7,000 are expected to streamline the industry.

Italgas, the third biggest gas distributor in Europe, is hoping to lift its share of the Italian market to about 40 percent from 30.3 percent now.

Gallo said it would invest some 1.3 billion euros to take part in the new gas zone tenders which would be on top of other planned capital expenditure of 2 billion euros over the period to 2020.

Italgas will post revenue of more than 1 billion euros this year, 98 percent of which will be from regulated tariffs.

$1 = 0.9037 euros Reporting by Giancarlo Navach and Francesca Landini; writing by Stephen Jewkes; editing by David Clarke

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