MILAN — The Ermenegildo Zegna Group’s first day of trading is set some time later this month, but the initial public offering has already been drawing attention — and funds — from investors.
On Monday, the Italian men’s wear group and Investindustrial Acquisition Corp., a special purpose acquisition corporation sponsored by investment subsidiaries of Investindustrial VII L.P., said in a statement they have agreed “with certain large institutional and other investors” on an additional private investment in a public equity facility of up to $125 million “to accommodate most of the demand.”
This step was agreed upon following “private inquiries from several investors” that have expressed interest in the business combination between IIAC and Zegna. For privacy reasons, the names of the investors were not divulged.
IIAC has raised total gross proceeds of $402.5 million in its IPO. The new PIPE facility is in addition to the $250 million PIPE facility and the 184.5 million euros (subject to adjustment) forward purchase arrangement with an affiliate of IIAC revealed last July.
To avoid diluting the existing pool of shares and reduce their value, investments in the new PIPE facility would be limited to the amount of redemptions by public IIAC shareholders. “If redemptions exceed a specified threshold, subscribers under the new PIPE facility will acquire shares of Zegna at closing, in varying amounts pro-rated to each investor’s maximum commitment depending on the level of redemptions,” explained the statement.
As reported, the extraordinary general meeting of IIAC has been set for Dec. 15 to approve the business combination. Its closing, the listing of Zegna and the first day of trading on the New York Stock Exchange under the ticker symbol “ZGN” are expected by the end of the year, following the IIAC’s shareholders’ meeting.
The IPO is expected to allow Zegna to further expand globally and continue to build its manufacturing pipeline through acquisitions.
The Zegna family will continue to control the company with a stake of about 62 percent. Investindustrial will have an 11 percent stake and 27 percent would be free floating. Based on the transaction value, the merged entity will have an anticipated initial enterprise value of $3.2 billion.
Upon the announcement of the deal in July, the transaction was said to deliver about $880 million of gross proceeds, consisting of IIAC’s $403 million cash held in trust, a fully committed $250 million private investment in public equity, upsized by $50 million in light of strong investor demand, and about $225 million in a purchase agreement with Strategic Holding Group Sàrl, an independently managed investment subsidiary of Investindustrial VII LP and subject to a lockup of up to three years.
Andrea C. Bonomi, founder of Investindustrial and chairman of the Industrial Advisory Board, said in July that the private investment in public equity had been oversubscribed very quickly.
Ahead of the listing, the men’s wear giant has kicked off a major rebranding project, which will result in the label being known simply as Zegna.
Last week, asked what he expects from the IPO, chief executive officer Gildo Zegna said the family company is “a true industrial reality, with factories and an integrated supply chain. Our objective is to continue to strengthen our industrial roots and at the same time remain laser-like focused on building our brand equity.”