MILAN — The COVID-19 pandemic is leaving in its wake a trail of casualties, but a new white knight is taking shape here.
Private equity Antares Advisory is launching a new fund aimed at supporting luxury and lifestyle companies dented by financial problems and non-performing loans and classified as UTP, or Unlikely to Pay.
“The focus of the fund is industrial rather than financial,” explained Giovanni Mannucci, partner and in charge of the operative team of the Luxury and Lifestyle Fund. “As the economy is rocked by the coronavirus pandemic, impacting companies of all sizes, Antares will provide not only private capitals but also a team of experienced managers and specialized professionals.”
While it is still being formed, Antares’ team at the moment also includes Gaetano Sallorenzo and Guido Vesin.
Sallorenzo is also no stranger to the fashion world. He was previously ceo of Miroglio Fashion and before that, was ceo of Les Copains under BVM SpA. Other former positions include ceo of Stuart Weitzman; ceo of Replay; ceo of Calvin Klein Jeans and Sportswear for Europe and Asia; president North America at Giorgio Armani; executive vice president of Ralph Lauren Europe, and president of Liz Claiborne Europe and then International.
Sallorenzo said Antares’ strategy is to “leverage potential synergies within the companies in the portfolio, as well as the strong managerial experience in this sector, which will allow us to analyze the companies and take action quickly.”
The goals of the fund include enhancing the value of the brands and their production processes; the creation of clusters; the strengthening of companies; the digitalization and the injection of new technologies, and protecting and enhancing the value of the territories and the prestige of Italian craftsmanship.
“Only 10 percent of small and medium-sized companies here sell online, it’s an enormous delay,” Mannucci lamented. “We must invest in digitalization and create a new vision as we’ve seen a huge fear of change.”
Mannucci said one of the objectives it to create stronger Italian companies with improved creditworthiness and, as a consequence, positive effects on the banking system. The management of UTP credits has become increasingly more of an issue. At the end of the first quarter last year, defaults estimated by the Italian banks totaled around 79 billion euros, further worsened in the last few months by a decline in gross domestic product, impacted by the COVID-19.
The fund, with an expected duration of six years, aims to accrue capital of 300 million euros, of which 50 million euros will be newly financed by private investors and 250 million euros of UTP credits from the banks, said founding partner Vesin. The approach to each company would be tailor-made, said Vesin, who is a board member of Isaia and a former managing director of Banca Akros.
“Creativity, good taste, attention to details are distinctive elements of fashion and Italian style recognized and desired around the world,” Mannucci said. “The Art of Beauty meant as a lifestyle experience is the basic element we want to strongly enhance and protect in a global context that is going through major changes that require new models, innovative organizational structures, flexibility and communication skills mindful of tradition yet looking at the future in an ongoing evolution.”
The luxury and lifestyle industry in Italy is made up of more than 66,000 companies that generate total of 95 billion euros through 500,000 employees, observed Mannucci. “Protecting the pipeline is a priority,” he said. “It can be strengthened through more investments in technology, distribution channels and sustainability for example,” Mannucci said.
“We will take into consideration those companies whose economic sustainability, even more than financial, in the context of changed market conditions, have a logic and solid foundation.”
Protecting employment is a sensitive issue now, as it is protecting the territory and the districts, the executive continued.
In a country fragmented into a web of small and medium-sized, mainly family-owned companies, aggregation is also a goal to help build production and distribution platforms. “More mass will help gain market shares and be more resilient in the face of international competition,” Mannucci observed. “The sector has played defense but it needs a system and it needs investments.”