Italian luxury sector home to strongest European IPO of 2013

Standing strong despite the tumultuous waves of a long recession, Italian luxury brands are a force to be reckoned with. And none more so than Moncler, the luxury ski-jacket maker that begins the new year bearing the title of Europe's strongest flotation of 2013.

Named after Monastier de Clermont, a mountain village near Grenoble, the firm's debut on the Borsa Italiana reached dizzying heights. Shares in the firm began trading up 40% on the pre-opening price. Based on requests for the stock, the firm opened at €14.40 per share, up from the original €10.2 pricing set the week before trading. The stock closed its first day of trading at €14.97, valuing the company at around €3.7bn.

For its original private equity backers – Carlyle and Progressio Investimenti – the saying good news comes to those who wait rang true. The private equity houses cancelled the planned IPO of the asset in 2011, which was thought to value the company at half of its 2013 valuation. The duo opted instead to sell a 45% stake to Eurazeo, in a deal that gave the firm an enterprise value of €1.2bn, equal to 12x EBITDA, according to unquote" data.

Italy was home to the strongest market debut of 2013, with Moncler surging by almost 50% on the first day of trading

Italian luxury brands have been successful in both public and private markets. Luxury cashmere cardigan maker Brunello Cucinelli and shoe designer Salvatore Ferragamo are historical successes of the stock exchange. In the private equity space, Permira's sale of Valentino to Qatari investors saw the firm sold for more than 25x EBITDA after a less than smooth holding period, with the GP holding on to money-maker Hugo Boss.

And GPs are piling into the space, EmCap buying into luxury shoemaker Moretti and Clessidra entering the shareholding of high-end jewellery and watchmaker Buccellati among the transactions completed last year. The trend looks set to continue in the New Year as GPs continue to circle Versace.

The centrality of Italian luxury goods was reflected last year in the unveiling of IQ Made in Italy Venture. Launched by Fondo Strategico Italiano alongside Qatari holding company Qatar Holding, the gargantuan fund – with its €2bn cap – will back Italian businesses in food, fashion, luxuries, furniture, interior design, lifestyle and leisure.

The venture was announced while the then prime minister Mario Monti was on a visit to the Middle East, during a drive to push exports as recession continued its inexorable drag on local consumption. But the giant continues to slumber and is yet to make its maiden investment, though reports have placed the flush investor as the frontrunner in the race for Versace, leaving the likes of Ardian and Permira in its wake.

Should the asset fall into private equity hands, the Versace transaction could mark an interesting change in the traditional relationship between private equity and luxury goods. Historically, around 70% of private equity investment in the Italian luxury goods sector in the last five years have seen the buyer take a controlling majority share in the firm, according to unquote" data. But the Versace family is only thought to be putting a fifth of the firm on the block. The pull of luxury goods could therefore be so strong as to break a trend in a country enamoured with tradition.

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• Topics
• Southern Europe
• Consumer
• Italy
• Carlyle Group
• Eurazeo
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