MILAN — The Diocesan Museum and the 13th century cloisters of the Sant’Eustorgio basilica here served as the ideal location to kick off Brunello Cucinelli SpA’s road show Monday.
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In his opening remarks, the entrepreneur underscored the value of human dignity and said he dissuaded investors who were looking for financial speculation and fast gains through his company and its initial public offering. “If you are aiming at profits at any cost, don’t turn to us. If we decide to send back a defective wool bale and our EBITDA (earnings before interest, taxes, depreciation and amortization) drops, nothing will actually happen to the firm,” said Cucinelli, who met analysts earlier that morning. “We can’t focus on one day of slow business and we are not looking for immediate growth. We must grow in a healthy, gentle and graceful way.”
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Cucinelli said funds from the listing will help grow the company internationally, taking advantage of the “many opportunities” he sees, and attracting young, international managers. The IPO, he said, is not to “ask for money, but to open to the world, and give continuity and longevity to the company. And I have no plans to buy other brands.”
Cucinelli also underscored how his priority was to continue to produce in Italy, with a high component of craftsmanship and artisanal quality. “We are a ready-to-wear brand and will continue as such. Accessories account for about 15 percent of sales. There are not that many luxury brands that are based on apparel,” he noted. “I really believe in Italian, very well-done, luxury ready-to-wear. It has lots of possibilities.”
Stefano Rangone, in charge of Equity Capital Market at Mediobanca, which is the global coordinator and joint book runner with Bank of America Merrill Lynch, said it was “simplicity and scarcity of the brand that sparked interest in banks and investors. This is a label focused on ready-to-wear and a crystal-clear positioning, which make it absolute luxury. It’s a very rare reality and scarce among publicly traded companies.”
The prospectus revealed that Cucinelli’s vehicle, Fedone Srl, will sell a 2 percent stake (or 1.78 percent after the capital increase) to Chinese entrepreneur Chen Long, who is a partner with the company in China and Macau through Sichuan Lessin Department Stores Ltd., at 7.08 euros, or $9.25 at current exchange rate, per share for a total of about 8.5 million euros, or $11.1 million. There is a three-year lock-up agreement.
“We have created a joint venture with Chen Long, which we control with a 51 percent stake,” said Cucinelli.
Also of note, industry figures such as Vionnet chief Matteo Marzotto and Hermès executive Candice Koo have become members of the board.
Cucinelli chief country officer Fabio Gnocchi said boutiques will be future growth drivers, without neglecting the group’s wholesale business. Wholesale revenues now account for 63 percent of sales, but the company plans for an even split between wholesale and retail by 2014. “Of our 59 stores, 20 are directly operated, but we aim at tripling this figure in three years,” said Gnocchi, on the sidelines of the presentation.
The road show will travel to cities such as London, Paris and Frankfurt and to the U.S., but Cucinelli said that he’s met “80 percent of the investors already” in Solomeo, where the company is based, to have a first-hand experience of the brand, its values and its production.
On Friday, the company priced its IPO at between 6.75 euros, or $8.87 at current exchange, and 7.75 euros, or $10.20, valuing the company at between 405 million and 465 million euros, or $532.3 million and $611.2 million. Including a capital increase, the firm is valued at between 459 million and 527 million euros, or $603.3 million and $692.7 million. According to the prospectus, the company aims to raise 151 million euros, or $198.4 million, from the offer. Cucinelli is offering 20.4 million shares, or a 30 percent stake in the company (33 percent with the Greenshoe option). The road show will end on April 27 and trading will begin on May 3.