Exor, here are Elkann’s next steps outside the car
Exor's moves and projects on healthcare, finance and real estate. The in-depth analysis of the Spanish newspaper El Pais
The Agnelli industrial dynasty, which has just purchased 15% of Philips , is consolidating its position in the health, technology and luxury sectors, reducing its exposure to the automotive sector – we read in the article in El Pais .
The Agnelli family, one of the most powerful industrial dynasties in Europe, which forged an empire over Fiat, has left behind the phase in which its business revolved around the engine and the new generations are consolidating a more diversified evolution, now focused on sectors such as health, technology and luxury.
THE INVESTMENT IN PHILIPS
The recent commitment to Philips, the Dutch health technology company, in which Exor, the family holding company, acquired a 15% stake, with an investment of around 2,600 million euros, is a further step in this direction. This is Exor's largest deal since the sale of US reinsurer PartnerRe for 9 billion euros in 2021.
In Philips, the Agnelli group will be a long-term minority investor, with the right to propose, among other things, a member of the supervisory board. This financial move also reflects how a crisis can be turned into an opportunity. The purchase comes after Philips faced lawsuits in the United States over defective respirators to treat sleep apnea. The stumble cost the company dearly on the markets, where it lost 62% from the highs of April 2021.
Although the Agnellis had already set their sights on Philips previously, they landed on the Dutch group at the most opportune time: with share prices close to historic lows. The dam was inaccessible a few years ago and a stake before the ventilator scandal would have meant paying more than three times what Exor paid this time. Furthermore, this year profits have returned to the company's first quarter accounts, which suggests that the exit from the tunnel is close. Analysts predict that, with a good turnaround, the company will grow in the coming years.
“The Agnellis decided to enter at the right time, which allows them to recover their investment more easily,” says Antonio Majocchi, an economist at the Luiss Carlo University of Rome, specializing in international business and management. And he adds: “The operation is part of Exor's general policy of redistributing liquidity. The idea is to invest in high-growth sectors such as healthcare and technology, which will continue to grow in the coming years. There is a progressive aging of the population and healthcare is becoming increasingly private. This is a very important investment.
JOHN ELKANN'S PLAN
John Elkann, the main heir to the Agnelli dynasty and head of Exor for over a decade, explained that the investment in the Dutch conglomerate is part of "a natural evolution" of the family business. In an interview with the Financial Times , Elkann, great-grandson of Fiat founder Giovanni Agnelli, had already clarified Exor's "strong affinity with healthcare". In it he also underlined that the investment of over 800 million euros made last year in the French healthcare group Institut Mérieux, specialized in biology and public health and present in several countries, “has strengthened the belief in the importance of this sector and its growth potential."
Under Elkann's grandfather, Gianni Agnelli, one of the most influential figures of 20th century Italy, who from the late 1950s onwards, for half a century, led and transformed Fiat into a multinational, the family business moved strongly towards the automotive industry. In that period the expansion into Eastern Europe and South America was completed and the acquisition of brands such as Lancia, Maserati and Ferrari was completed. However, the Agnelli group also held stakes in companies in the food, financial, real estate and publishing sectors. He also owned Juventus and the Turin newspaper La Stampa, which Elkann retained.
Although Gianni Agnelli had already begun the transformation of the family business before his death in 2003, when Elkann arrived that year he found a group in danger, with Fiat in debt at unprecedented levels and relations with its US partner General Motors in deterioration.
Under the leadership of Elkann, 47, Exor has increased its net worth from around 4 billion euros in 2009 to the current 33 billion euros. The shares, listed on the Dutch market since last year, have gone from a single-digit value – less than six euros – in 2009 to the current 80 euros per share.
The first decade after Elkann's grandfather's death was one of conservation: "We focused on divestments, simplification and debt reduction to make sure we saved what we had," he told the British newspaper. The following decade was “the decade of stabilization” which, he said, put the group on a steady growth trajectory. This time frame saw the completion of major transformations in the family businesses, such as the creation of agricultural equipment manufacturer CNH Industrial from the merger of CNH Global and Fiat Industrial; Fiat's acquisition of US rival Chrysler to form FCA; the spin-off of Ferrari from Fiat and Fiat Industrial and Fiat's acquisition of US rival Chrysler to form FCA; the spin-off of Ferrari from Fiat and its listing on the Milan Stock Exchange, where shares have risen 40% in the last year, exceeding 280 euros per share; the merger between FCA and Peugeot to create Stellantis, listed in Paris, of which Exor is the largest shareholder with a 14% stake; the acquisition and subsequent sale of PartnerRe.
“EXOR HAS AN EXCELLENT TRACK RECORD”
“Exor has an excellent track record, it has grown a lot in recent years. From a strategic point of view, it was managed well,” says Martino De Ambroggi, analyst at the investment bank Equita. “We are clearly looking for upwind sectors,” summarizes Suzanne Heywood, COO of Exor and president of CNH Industrial.
Exor, which currently sits on the boards of directors of all portfolio companies, planned to reinvest the proceeds from the sale of PartnerRe in the technology, luxury and healthcare sectors and acquired a 24% stake in the luxury footwear maker Christian Louboutin, a majority stake in Chinese lifestyle brand Shang Xia and a 45% stake in Italian Lifenet Healthcare.
This year the Agnelli group also returned to financial services with the launch of Lingotto, a 3 billion dollar investment company, based in London and chaired by the former British Finance Minister George Osborne, for which it committed an initial amount of 1.5 billion euros from the sale of PartnerRe.
The economist Majocchi believes that "the Agnelli family is becoming more and more finance and less and less industry". Guido Corbetta, professor of entrepreneurship and family business at Bocconi University in Milan, recalls that Exor was already diversified in the automotive sector, with Stellantis, CNH Industrial, Iveco or Ferrari. “Now they are opening up to new sectors. By investing in luxury or technology, they continue a family tradition. They follow a family investment capital logic, with a long-term horizon, different from financial investment capital,” he says.
But it wasn't all rosy in the Agnelli galaxy. The death in 2018 of Sergio Marchionne, the man who saved Fiat from collapse, marked a change of era and a critical moment of uncertainty for the future of Exor.
Additionally, Juventus, owned by the Agnelli family for a century, has faced allegations of market manipulation and false accounting statements that led to the wholesale resignation of the club's board of directors last year and forced a reshuffle of management. The scandal also weighed down the team on the stock market.
With €2 billion from the PartnerRe sale still to be spent, analysts expect the investment wave to continue, along with disposals of some smaller, non-strategic stakes. “Exor has a low debt financial structure, which allows it to continue making investments of between 4 and 5 billion euros. It is expected to continue investing in its three key sectors,” estimates Martino De Ambroggi.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/exor-investimenti-sanita-immobili-finanza/ on Sun, 17 Sep 2023 05:51:03 +0000.