MILAN — Is Exor poised to become a new fashion luxury conglomerate?
Following the news on Monday that the Agnelli family’s holding company was investing in the Christian Louboutin brand, after its investment in Hermès International’s China project Shang Xia last December, the question is reasonable, but moot, according to industry observers and sources familiar with Exor’s strategies.
Indeed, responding to WWD, a, Exor spokesman clarified that the holding “invests in single companies, not in sectors, and in exceptional businesses and founders with shared values and where it can add value and build great companies. It is the quality of the company, its team and culture and its attractive prospects that are the key drivers of the decision to invest.”
On its website, Exor states that its purpose is “to build great companies” and that, across all of its investments, it applies some common criteria, including “Understanding — we invest only when we understand.”
And by owning Ferrari, Exor certainly understands luxury.
A person familiar with Exor’s thinking, who spoke on condition of anonymity, explained that during its financial markets day held in November 2019, Exor identified luxury and technology as potential sectors of interest.
“Exor is a family holding company and it invests to create value. Families play a very important part in Exor’s investment thinking. Exor has owned the Juventus soccer team for more than 100 years, the same with Fiat, and with Ferrari for more than 50 years. That difference of approach is fundamental and quite unlike a financial investor. Exor brings its deep experience in matters of governance, sharing the lessons of many decades helping businesses to grow and become ‘great’,” the source said.
It is understood Louboutin and the Agnelli family go way back. “Oftentimes, founders looking at ways to move their brand onto the next phase of development are courted by private equity funds or big groups. That means partnering with a financial investor with a short-term horizon or essentially selling,” continued the source. “Christian Louboutin does not want to sell. He is young, he wants to grow and continue his extraordinary journey to make his company great. That’s why Exor is an ideal partner. When you invite someone into your house, it’s a question of trust. Of course, you want to be very careful with your creation.”
Exor is a long-term investor, working with founders and entrepreneurs in partnership. The person said the holding is very selective, as “it identifies not just sectors, but individuals with whom it shares fundamental values. It must be comfortable cohabiting with the leaders of its companies and vice versa. There must be a deep understanding.”
Exor has grown into a giant holding company, reporting revenues of 143.8 billion euros in 2019. In January, after more than a year of negotiations, its controlled Fiat Chrysler Automobiles group and French automotive group PSA completed their merger, combining into a company called Stellantis. The new automotive group operates in more than 130 national markets with 400,000 employees and comprises brands ranging from Fiat, Maserati and Alfa Romeo to Chrysler, Jeep, Peugeot, Citroen and Maserati. It was a combination masterminded by Elkann, who has been leading the family holding company for 16 years.
In addition, the holding comprises PartnerRe, a leading global pure-play reinsurer; CNH Industrial, which designs and produces agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other uses; The Economist newspaper in London, and media group GEDI Gruppo Editoriale, which includes Italian newspapers La Repubblica and La Stampa, il Secolo XIX and other local newspapers, several magazines including L’Espresso and National Geographic Italia, the local edition of the Huffington Post and three national radio stations.
John Elkann, grandson of the late legendary Gianni Agnelli, is the chairman and chief executive officer of Exor. The holding will be accorded two out of seven seats on the board of Christian Louboutin, said the Exor spokesman, and the names of the Exor representatives will be made known at the closing. The low-key and publicity-shy Elkann, 44, will not be one of them.
“This is a very intelligent move so congratulations to Exor for catching this extraordinary opportunity. Christian Louboutin is an extremely appealing brand and this kind of operation would be surely appealing to any investor. This transaction points to a very solid relationship between two families joining forces to grow the brand. It’s a relationship built on trust,” said Luigi de Vecchi, chairman of Citi EMEA.
“Luxury is one of the most interesting sectors, offering great growth potential, but we should not necessarily infer that this acquisition is meant to build a luxury conglomerate. I see it as a strategic transaction by an Italian group investing in a French brand in a minority position, which is a positive signal for the country. Exor has experience in the luxury sector through Ferrari and it will be able to help Louboutin grow globally,” said de Vecchi.
The holding, he said, has long been very well-known in France, and is much respected, even before the creation of Stellantis.
A Milan-based luxury goods analyst, who requested anonymity, said “it does look like Exor wants to consolidate its presence in the luxury sector, given Ferrari is part of its portfolio.” He noted that “the luxury sector has shown great resilience in 2020, even though the footwear segment is highly competitive. I also think the fact that they are shifting onto a company that is not publicly listed is a positive element, reducing the potential discount investors could apply to the shares, as the holding becomes more unique and less replicable, creating more interest for investors.”
“I personally find this operation very interesting,” said Alessandro Maria Ferreri, owner and CEO of The Style Gate consulting firm, who also pointed to the importance of family relations and recalling the longtime friendship between Louboutin and Ginevra Elkann, sister of John Elkann, and Diane von Furstenberg, who married into the Agnelli family through Egon von Furstenberg. This, however, would not be enough and Ferreri underscored Louboutin’s “incredible business,” his “unique talent and a product that is hugely recognizable. Last but not the least, any woman on the planet who wants to be even more beautiful, sensual and elegant surely wants a pair of Louboutins.”
The brand has much growth potential in the global market, continued Ferreri, and Louboutin has “helped dispel the myth that women in China or Japan don’t wear heels. It’s more a matter of fit.” Men’s, too, is a very interesting division for the brand and he emphasized Louboutin’s “industrial and production asset with three vertical and owned” complexes that develop prototypes.
In 2019, Ferrari revealed it was working on a lifestyle project, launching apparel collections to be produced by Giorgio Armani’s manufacturing sites under a long-term agreement.
Ferrari’s former CEO Louis Camilleri resigned his post in December for personal reasons and chairman John Elkann took over as interim CEO. A search for a successor is ongoing and last month, as reported, Marco Bizzarri, president and CEO of Gucci, denied rumors that he was headed to Ferrari.