Ferretti navigates choppy markets to launch €890m Hong Kong IPO

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Two and a half years ago, Italian yacht builder Ferretti suspended plans for a Milan listing at the last minute. It is now being made public in Hong Kong – a nod to its biggest shareholder, China’s state-controlled Weichai Group, and the region’s increasingly wealthy population.

The price of HK$22.88, or €2.66, per share is at the low end of the range cited in the listing prospectus, which valued Ferretti at up to 1.2 billion euros. But it is significantly higher than the 581 million euros, or 2 euros per share, for which the company would have been listed at the end of 2019. Still, the timing seems incongruous, with super yachts coming under intense scrutiny as precious asset for the Russian oligarchs.

“I am exhausted but very happy. Not everything has been easy, especially given the geopolitical context, but the result is above our expectations,” Ferretti chief executive Alberto Galassi told the Financial Times.

The IPO, which values ​​the company at 10 times Ebitda, or 890 million euros, is the first IPO of a European group since the Russian invasion of Ukraine last month. After its debut on Wednesday, the free float will be 25%.

Despite geopolitical headwinds and ongoing Covid-19 restrictions, particularly in Asia, Galassi, credited with driving the group’s turnaround since taking over in 2014, said listing could no longer be postponed . Ferretti is aiming for substantial growth through investments aimed at expanding its range, increasing the dimensions of the yachts and strengthening its after-sales services such as chartering and refitting.

“Our shareholders were extremely [confident], then we also realized that the war in Ukraine was considered more remote by investors in the Asia-Pacific region, who were more comfortable investing at this stage,” Galassi said. Leading Asian investors account for about 70% of the total IPO.

Ferretti owns iconic brands such as Riva, Wally and Pershing, with clients including former England footballer David Beckham. It operates six shipyards across Italy and is a market leader in 25-meter yachts with prices ranging from 4 to 20 million euros.

The company has been controlled by Weichai since 2012, which has an 86% stake. An 11% stake was bought in 2016 by Piero Ferrari, heir to the family that founded the eponymous luxury car brand.

“We know the IPO market is dead right now and Ferretti is worth more than the value of the IPO, but we prefer to list below the peak and be confident that investors will make a profit by this time. the end of the lockdown period,” Galassi said. .

“We represent the crown jewels in this difficult environment and investors have been smart enough to notice that.”

Galassi said Hong Kong is a market where Made in Italy and luxury are highly valued. The Milanese fashion house Prada was listed there in 2011. “What you need are the infrastructures, the ports, the marinas. . . But the Chinese government is investing a lot of money in these assets,” he said.

The Managing Director is unable to attend the Hong Kong Stock Exchange listing ceremony due to Covid restrictions. “But paradoxically,” he noted, “the pandemic has boosted our sales, as an increasing number of super wealthy customers have realized that a yacht gives you the freedom that has been taken away by Covid restrictions.”

Ferretti is working on orders worth more than 1.2 billion euros after reducing its debt from 265 million euros in 2018 to 93 million euros in net cash in 2021. During the same period , revenues fell from 615 million euros to 898 million euros last year.

While Ferretti and the wider yacht industry have shrugged off the pandemic, concerns about the longer-term impact of the conflict in Ukraine are growing.

“This war will have serious long-term impacts for Europe because of its trade ties with Russia and its energy dependence,” said Galassi, who also criticized the EU’s ban on exports of china products. luxury goods to Russia worth more than 300 million euros.

Only 3% of the Ferretti Group’s revenue will be lost due to the impact of the sanctions. And the mega yachts, prized by the Russian oligarchs, represent less than a tenth of the group’s sales.

“Sanctions will hurt Russia, but they will also end up hurting Europe,” Galassi said. “Corporations want peace. The sooner this war ends, the better; some Made in Italy sectors will be devastated.

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