MILAN — Is IT Holding looking for a stakeholder?
This story first appeared in the September 12, 2008 issue of WWD. Subscribe Today.
The financial markets here thought so Thursday, pushing up the Italian fashion group’s stock price after a report by a local financial daily that IT Holding chairman and chief executive officer Tonino Perna might bring in a new Hong Kong-based investor.
The report in MF, verified by sources, said Chinese supply chain and retailing group Hembly International Holdings was the front-runner in talks with Perna about taking a stake in IT Holding parent company PA Investments SA. Neither party would comment on the speculation.
PA, which is fully owned by the Perna family and controls 61 percent of IT Holding, has a debt of about 140 million euros, or $196 million at current exchange, and Perna is seeking to reduce it by bringing in a partner, the sources said. Perna also owns another 1 percent of IT Holding via GTP Holding SpA, a separate holding company for PA.
Despite interest from other suitors, Hembly’s trump card in any prospective deal is that it has distribution expertise in Asia, which is a relatively underexploited market for the IT Holding portfolio of brands, sources said.
“It makes sense from both a financial and industrial point of view,” a person familiar with the situation said. “Sorting out his own leverage problems will help Perna secure his position…and having an Asian partner would open up markets outside of Europe. The question is, can [Perna] handle a big industrial partner [like Hembly]?”
IT Holding, which owns the Gianfranco Ferré, Malo and Extè brands and under license operates the Just Cavalli, C’N’C Costume National and Galliano labels, generates 20 percent of its revenues outside Europe, with only 7 percent coming from the Far East and Japan. (Italy accounts for the lion’s share of group revenues at 45 percent, followed by the rest of Europe with 33 percent.)
Hembly, which was founded in 2000 by Chinese businessman Billy Ngok to provide supply chain services for Lotto sportswear, has joint ventures with Stonefly, Sisley and Lotto for distribution and retailing in China. It also provides supply chain services in the region to more than a dozen other brands, including Armani Jeans, D&G, Diesel and Valentino Red, according to the company’s Web site. In 2006, Hembly generated revenues of 611.3 million Hong Kong dollars. Last year’s results are due out Sept. 19.
IT Holding’s stock has underperformed the Milan Bourse by about 15 percent in the last six months, weighed down by a debt of almost 318 million euros, or $445 million, including a bond of 185 million euros, or $259 million, which expires in 2012.
Based on a share price of 0.46 euros at the close of trading Thursday, the company has a market capitalization of 113 million euros, or $158 million.
The stock gained more than 5 percent. Perna said in June that the stock was undervalued, but, according to one industry expert, “[IT Holding’s share price] doesn’t undervalue the company