The manufacturer of packaging for the food, dairy and other industries, said the plan for the Blackwood facility will create 70 jobs and safeguard more than 170 existing roles.
New plant and machinery and the potential for an additional manufacturing unit will enable the company to meet the growing demand for its range of products, said the firm.
The Blackwood facility produces a range of paper cups, containers and plastic lids for hot and cold drinks and dairy products, as well as folding cartons.
It follows a 2010 announcement of an investment of £12m (€14.2m) to boost capacity and competitiveness as part of a four-year programme.
Lorenzo Angelucci, managing director, said that Seda UK had enjoyed considerable year on year sustained growth since its relocation to Wales and the additional investment will increase capacity.
"We have seen growth in all business areas and this project is particularly important to meet existing and future contracts. We had to present a strong business case to the board to win this investment and the grant support from the Welsh Government helped secure the project for Wales.
“This project will consolidate the long term commitment the Seda Group has to the Wales operation, for the benefit of our employees, customers, suppliers and in particular the local community. Seda UK has a policy of sourcing locally wherever possible, and as a result, this latest expansion will create additional spin off benefits for the local economy."
Seda UK also has a full-scale graphic design department which includes a printing plates production unit and also a Research and Development centre at their Blackwood facility.
Economy Minister Edwina Hart welcomed the investment which is being supported with £5.4m business finance from the Welsh Government.
The Minister met the Italian owners at the site last year to discuss the potential investment project.
"Seda has continued to invest and expand in Wales with support from the Welsh Government since it moved here in 2004," she said.
“It employed 278 at the time of this grant application at its site in Hawtin Park, making a significant contribution to the local economy.
“This new project will safeguard and create a significant number of jobs over the next five years."
Seda UK is a subsidiary of Seda International Packaging Group SpA, which is headquartered in Naples and the firm also has sites in Australia, Germany, Spain, Switzerland and Portugal.