Italy VC & IPO Newsletter

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ITALY V.C. & I.P.O.NEWSLETTER, OCT. 27, 2000

With this issue we are resuming regular publication of the 
newsletter. We have completed the restructuring of our web site, 
which now presents a rich plate of services and resources for 
Entrepreneurs and Venture Capital companies, alike. Let us know what 
you think about it!

Italian Finance News Digest
VC deals - IPOs - Internet - TLC -  UMTS- Weekly closing prices on 
Nuovo Mercato Venture Capital & IPO companies Profiles - Internet 
JOBS - VC & Finance Conferences

ITALIAN ECONOMY & FINANCE NEWS DIGEST

NUOVO MERCATO INDEX : FRIDAY CLOSING, Oct.13: A MEAGER  +0.85
(all closing prices in FULL VERSION)

EDITORIAL - THE ECONOMIC & POLITICAL BLUNDER OF THE ITALIAN  UMTS AUCTION
The week passed away was riddled with news and polemics surrounding 
the UMTS auction blunder. BLU, one of the 6 contenders for the 5 
licenses, withdrew after only an initial round of bids. GAME OVER!,  
for the Italian Government and for the Italian taxpayers,  which lost 
something like E 10 billion in the process. Two weeks ago we had 
anticipated in this publication that this could and, according to our 
friend  Murphy, would happen. It is utterly  naive  and foolish to 
conduct a tender for 5 licenses with only 6 contenders. It is much 
worse  to go ahead with it,  even after one of the 6 contenders 
tells  you that he might drop out early on, due to financial 
difficulties. 
But Italy is a land where impossible things can happen, where 
political gain is more important than the country's welfare.  Hence 
the decision of the Government to go ahead. Of course we assume that 
it was taken in good faith!  It would be interesting to know if the 
Advisor to the Government, CREDIOP, was  aware or made aware of BLU's 
financial weakness . Somebody in the whole convoluted process 
probably cheated. Who, and for whose gain?  These are questions that 
the Court of Rome will attempt to answer in the next couple of 
investigative decades! By then it will be irrelevant , maybe even 
from a technology standpoint.
At any rate,  after the blunder, the Government's  hastily erected 
line of defense, a E 2 billion fine to BLU, didn't convince at all. 
The whole affair can be described, in the most benevolent 
interpretation, as having been conducted in an amateurish manner! In 
the worst interpretation, it is a serious economic-political blunder 
by the current coalition and, in the minds of the investigating 
magistrates, perhaps a fraudulent cartel affair aimed at keeping a 
lid on the cost of the licenses. STAY TUNED FOR MORE!

IPO OF THE WEEK
CAD IT,  a software house specializing in e-solutions for banks, 
IPOed impressively  this  past week, gaining + 34% on its first day 
of trading .
IMPENDING IPOs: 
NOVUSPHARMA, a biotechnology concern specializing in oncology, 
founded in 1998 as a spin-off  from BOERINGHER  MANNHEIM, following  
ROCHE's  acquisition of the former.  Price  range set at 66.5 - 86.5 
. IPO scheduled for Nov. 11th.

VETERANS
Last week's performance left the index relatively unchanged with only 
a meager +0.85% gain on average. Selective  buying and selling 
averaged out the index, with strongest performances  by ACOTEL, 
heavily  penalized in previous weeks, TISCALI, leader of the UMTS  
consortium ANDALA and CDB WEB TECH, which reported positive pre-tax 
earnings results; and heaviest losses by FREEDOMLAND, still smarting 
from legal  problems  on allegations of fraud,  e-commerce leader  
CHL and e-solutions companies TXT E-SOLUTIONS and TECNODIFFUSIONE.

FREEDOMLAND dropped 10%, even in the wake of the appointment of LUIGI 
GUATRI  as President of the company. GIOVANNI ROMAGNONI, the CEO, 
denied rumors of liquidation of the company or of a takeover by 
FININVEST group. FREEDOMLAND, a WebTV company, collected over E 300 
million in a hyper-hyped IPO at the beginning of the year.

CD WEB TECH, a holding company for investments in Internet and ICT 
private companies, venture capital companies and technology hedge 
funds, presided by Ing. CARLO DE BENEDETTI, announced positive 
consolidated pre-tax quarter  earnings  of  E +2.7 million  vs.  E -1 
million recorded  on June 30th, corresponding to an estimated 540% 
IRR. During the 3d quarter the company increased investments in 
venture capital companies and hedge funds to E 215 , up 50% from June 
30th E143 million.

TISCALI  recorded  strong gains following the positive conclusion 
(for Tiscali and its sharehodlers!)  of the UMTS licenses' auction, 
with ANDALA , the consortium it leads, gaining access to one of the 5 
licenses. TISCALI' performance was shared, with a loud sigh of relief 
let out by the market, by nearly all companies involved in the UMTS 
poker game.

CDC reached an agreement with EUTELSAT, one of the most important 
satellite companies in Europe, to broadcast multimedia services, 
including  heavy files such as film and audio, via satellites to 
personal computers. The two companies agreed to set up a 50/50 J-V 
called  OPEN SKY.

TELECOMMUNICATIONS

UMTS (3G mobile telephony)
As anticipated in the Editorial , the Mother of all Auctions, the 
Millennium Auction, the Santa Claus Auction , etcŠ.,  ended in a 
big,  loud and politically-legally  charged flop for the Italian 
Government and in a fat gift for the bidding companies. The weakest 
of the bidders , BLU, withdrew  after an initial round of bids. It 
was an economic and political  miscarriage  for the Government and a 
fat (a E 10 billion! -thick  bacon)  gift to the other participants 
to the tender. The market was quick to react by loudly toasting to 
the unexpected (maybe not so unexpected!) gift to all the winning 
bidders and their respective shareholders!   TELECOM ITALIA,  WIND, 
OMNITEL, ANDALA, IPSE, were all  blessed with heavy gains. A $ 10 
billion dividend  (or unexpected savings, whatever) is  not something 
to which the market is used to, Š in the rest of the world! But this 
is Italy and impossible things can happen here!  The 5 licenses have 
been awarded amidst foul play cries and polemics from the opposition 
and the 2 consortiums, ANTHILL and TU MOBILE, that were excluded from 
participation to the auction.

BLU, the weakling of the bidders, is however  no weakling at all if 
one looks to its shareholders:  BRITISH TELECOM , AUTOSTRADE , ED. 
HOLDING of the BENETTON family , BNL, MEDIASET, CALTAGIRONE, ITALGAS  
and DISTACOM !  It is foolish to think that these companies can't 
find the resources  to buy a license. The most logical explanation is 
that they didn't want to bleed their coffers beyond a certain amount. 
Who can blame them! 
BLU is not at fault in our opinion! What is profoundly at fault,  is 
the decision of the Government to go ahead in bidding out 5 licenses 
with only 6 contenders in a market rife with  news about the 
squabbles in BLU' s basement. And what is astonishing is that 
CREDIOP, known to have well- grounded antennas, didn't pick up such 
background noise. But maybe it did and didn't share it with its 
client,  the Government, or it did share it,  but the Government 
decided to gamble E 10 billion of taxpayers money for political 
gains, orŠ etc. There will  be recurring questions in the following  
months on who screwed  up, who collided, who cheated and for whose 
gain. As far as we are concerned, the GAME IS OVER and we will limit 
from  now our reporting only to news relevant to the content of this 
newsletter . The rest is better left to prosecutors  and courts.

OTHER TLC NEWS
TELECOM ITALIA announced the closing of a E 200 million bid to build 
a network , Arianna, composed of two raw fiber dorsal  lines joining  
Milano-Palermo  (N-S) and Torino-Venezia  (W-E), and the sale of 
BENI STABILI, the  Real Estate assets of the group.

SEAT's  PELLICCIOLI, announced that the TIN.IT+SEAT  merger is on 
schedule to be operative by the end of November and that the 
TELEMONTECARLO acquisition is also proceeding according to schedule.

INFOSTRADA, the ex-VODAPHONE carrier recently acquired by utility 
giant ENEL, announced excellent 3d quarter revenues and earnings 
results with clients now at 6.7 million.

PROFILE OF THE WEEK
BB BIOTECH (Ticker: BB.MI)
BB Biotech, a Zurich-based  holding founded in 1993, is an investment 
company, invests in biotech companies globally and  has become one of 
the largest pure play biotech investors.  BB BIOTECH is listed  on 
the Swiss Stock Exchange, Neuer Markt in Germany and the Nuovo 
Mercato in Italy.  Its investment rationale and business model  is 
based on the assumption that the mounting number of drugs discovered  
by biotechnology companies making it to the market will make the 
latter profitable and hence drive their share price up growth with 
above-average appreciation potential. Its  portfolio  composition is 
split  between core holdings, representing  over 60% of the total, 
and small, often pre-IPO companies,  representing the balance. Core 
holdings include strategic investments in the following companies and 
sectors:
MEDIMMUNE : Infections, cancer and psoriasis
IDEC PHARMA.  - Oncology, psoriasis and rheumatoid arthritis
GENENTECH - Oncology, myocardial infarct, cancer, psoriasis, asthma, 
growth hormone, cystic fibrosis.
ALEXION - Cardio-pulmonary bypass surgery ,  rheumatoid arthritis.
CV THERAPEUTICS - Cardiovascular illnesses
AVIRON - Virus vaccines and genetic engineering-based vaccinations 
for infectious diseases such as influenza.
Small  positions are held in well  known public companies ( AMGEN, 
BIOGEN, IMMUNEX, IMCLONE)  or emerging companies such as GENVEC, 
PHARMACOPEIA,  TRIMERIS and  others.

The  company, which  exhibits a well-known  Nobel laureate, DAVID 
BALTIMORE,  in its Scientific  Advisory  Board, boasts a 36% 
annualized return  since launch in 1993.

VENTURE CAPITAL DEALS
(0122) SCF (Fresh Toasted Coffee Franchise - ITA - 2°)(New)
(0121) EPI (Smart Cards & Casino & gaming Industry - USA - Seed)(New)
(0120) HFH (Russian Technology Incubator & Search Engine - ITA - 2° Round)
(0118) AIM (Internet ASP,  B2B Software-Russia & USA - 2° Round)
(0117) EIA (Internet Portal, Arts & Entertainment - USA - 2° Round)
(0116) DHP (TV, Animation,  Multimedia - U.S.A.- Start-up funding)

INTERNET JOBS
Hot jobs in Italy: Leading Intranet Company seeks 5 Developers - Milan
For  more info send an email to  hclub@help-finance.com

CONFERENCES & SYMPOSIUMS
(15% discount to help-finance.com subscribers)
VENTURE CAPITAL INVESTING IN ISRAELI COMPANIES NEW YORK, NY  JAN. 
17th - 18th  2001
CORPORATE VENTURING & STRATEGIC INVESTING - PALM SPRINGS, CA   FEB. 
26th - 28th  2001
StartVenture - Investing in Russian Technology and Internet - 
November 30 - Holiday Inn Moscow

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Best Regards
Sincerely,

Giovanni Cozzone, CEO
http://www.help-finance.com
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