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

Two-and-a-half years in the past, Italian yachtmaker Ferretti shelved its deliberate Milan itemizing on the final minute. It’s now going public in Hong Kong — a nod to its principal shareholder, China’s state-controlled Weichai Group and the area’s more and more rich inhabitants.

The HK$22.88, or €2.66, per share value is on the low finish of the vary cited within the itemizing prospectus, which valued Ferretti at as much as €1.2bn. However it’s considerably larger than the €581mn, or €2 per share, the corporate would have listed for on the finish of 2019. But the timing appears incongruous with tremendous yachts coming beneath scrutiny as a prized asset for Russian oligarchs.

“I’m exhausted however very blissful. It hasn’t been all clean crusing, particularly given the geopolitical context, however the end result is above our expectations,” Ferretti chief govt Alberto Galassi advised the Monetary Instances.

The preliminary public providing, which values the corporate at 10 instances ebitda, or €890mn, is the primary main itemizing of a European group since Russia’s invasion of Ukraine broke out final month. Following its inventory market debut on Wednesday the free float will probably be 25 per cent.

Regardless of geopolitical headwinds and persevering with restrictions associated to Covid-19, significantly in Asia, Galassi, who’s credited with turning around the group since taking the helm in 2014, stated itemizing may not be delay. Ferretti is concentrating on substantial development by investments geared toward increasing its vary, growing yacht dimensions and strengthening its aftersales providers equivalent to chartering and refitting.

“Our shareholders have been extraordinarily [confident], then we additionally realised the struggle in Ukraine is seen as additional away by traders within the Asia-Pacific area, who have been extra snug to take a position at this stage,” Galassi stated. Asian cornerstone traders make up roughly 70 per cent of the full of the IPO.

Ferretti owns iconic manufacturers equivalent to Riva, Wally and Pershing, with prospects together with former England footballer David Beckham. It operates six shipyards throughout Italy and is a market chief for yachts measuring 25 metres with costs starting from €4mn-€20mn.

The corporate has been managed by Weichai since 2012, which owns an 86 per cent stake. An 11 per cent holding was purchased in 2016 by Piero Ferrari, the inheritor of the household that based the eponymous luxurious automobile marque.

“We all know the IPO market is lifeless proper now and that Ferretti is value greater than the IPO worth, however we’d quite checklist under peak and be assured traders will make a revenue by the tip of the lock-in interval,” Galassi stated.

“We symbolize the crown jewels on this tough context and traders have been intelligent sufficient to note.”

Galassi stated Hong Kong is a market the place Made in Italy and luxurious are extremely valued. Milan-based vogue home Prada listed there in 2011. “What you want is the infrastructure, ports, marinas . . . However the Chinese language authorities is investing some huge cash in these property,” he stated.

The chief govt is unable to attend the itemizing ceremony on the Hong Kong change due to Covid restrictions. “However paradoxically,” he famous, “the pandemic spurred our gross sales, as an growing variety of super-rich purchasers realised a yacht offers you the liberty that has been taken away by the Covid restrictions.”

Ferretti is engaged on orders value greater than €1.2bn after slashing its debt from €265mn in 2018 to €93mn in web money in 2021. Over the identical interval revenues grew from €615mn to €898mn final yr.

Whereas Ferretti and the broader yacht business have shrugged off the pandemic, concern over the longer-term affect of the battle in Ukraine is mounting.

“This struggle may have severe long-term impacts for Europe due to its commerce ties to Russia and its vitality dependency,” stated Galassi, who additionally criticised the EU’s ban on luxurious exports to Russia value greater than €300mn.

Solely 3 per cent of Ferretti group revenues will probably be misplaced due to the affect of sanctions. And mega yachts, favoured by Russian oligarchs, symbolize lower than a tenth of the group’s gross sales.

“Sanctions will damage Russia however they are going to find yourself hurting Europe too,” Galassi stated. “Companies need peace. The earlier this struggle ends the higher; some Made in Italy sectors will probably be devastated.”