Italian luxury group Zegna will be made public in a $ 3.2 billion deal



Ermenegildo Zegna, the Italian luxury fashion group, has agreed to go public by combining with a US special purpose acquisition company in an agreement that gives the company a value of $ 3.2 billion and involves the consolidation trend that drags the luxury industry.

Zegna, a family business since its founding in 1910, will raise $ 880 million by combining it with a Space launched by the European private equity group Investindustrial and chaired by former UBS executive Sergio Ermotti.

Part of the funds raised will go to help Zegna invest in its men’s clothing business and give it firepower to look for other brands to acquire, based on its $ 500 million purchase of the American luxury label Thom Browne in 2018.

Gildo Zegna, the 65-year-old chief executive, told FT: “We could have been independent for another 100 years. But the timing is right and the world has changed a lot and luxury has become a very big challenge.”

Zegna, who in a pre-pandemic interview he had said that he had no interest in making the business public and added: “The opportunity came and we took advantage of it. The scale is becoming increasingly important. . . with the right partner. . . we can do a fantastic job taking advantage of new opportunities if they come. “

The decision to list contrasts with the path many independent, family-owned luxury brands have taken, even before the pandemic wreaked havoc on the industry, to sell to larger conglomerates or private investors.

The Italian luxury brand Etro will become the latest to follow this trend on Monday, when it is expected to confirm the sale of a majority stake that values ​​its business at 500 million euros to L Catterton, the private equity group supported by LVMH.

Under the terms of the Zegna transaction, the family will sell a portion of its stake and retain 62% of the combined company, which is attributed a $ 2.5 billion equity value.

Ermenegildo Zegna in London: the group had previously rejected its advertising © Jason Alden / Bloomberg

Revenue includes approximately $ 400 million raised last year by Investindustrial Acquisition Corp., the New York-listed entity with which Zegna will merge, as well as $ 250 million from private investors it did not want to appoint.

Another $ 225 million will come from Investindustrial, the investment company led by Andrea Bonomi, once the deal is finalized. Bonomi, himself heir to an Italian industrial family, has courted Zegna since January to reach an agreement after months of negotiations.

The investment in Zegna will give Investindustrial a 11% stake in the company, along with the shares it will receive as a sponsor of the Spac. Investindustrial has opted for a three-year closure of the shares acquired through its investment.

Zegna was founded by Gildo’s grandfather, Ermenegildo, as a luxury textile supplier in the city of Treviso in northern Italy.

The company became known for its elegant menswear since the 1960s and was one of the first luxury groups to enter China in 1991, establishing brand recognition soon and, most importantly, establishing strong relationships with homeowners in what is now their largest market.

As demand for men’s clothing has declined in recent years, the company has focused on what Gildo Zegna describes as “luxury leisure” and has invested in its “sheep to buy” supply chain. as others have sold their factories design, marketing and merchandising.

Since acquiring Thom Browne, Zegna told FT that the group had taken the brand to a higher level, doubling sales. Zegna, which employs more than 6,000 employees, also has close ties to Chanel, Tom Ford and Gucci, to which it supplies fabrics.

Gildo’s cousin Paolo, sister Anna and two sons Edoardo and Angelo also work for the business. Asked if the decision to list his actions meant that an executive outside the Zegna family could end up succeeding Gildo, Bonomi replied that it would be “right” for the next chief executive to be a Zegna, but to stay in the background.


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