Sanlorenzo and Ferretti: private or public?

Written by Justin Ratcliffe

According to the Italian financial press, Massimo Perotti is preparing to float Sanlorenzo Yachts on the Milan stock exchange. The reports respond to rumours that the brand’s chairman and CEO is in discussion with various banks and financial advisors to coordinate an initial public offering (IPO).

Coming after a period of sustained growth and the capital reorganisation of Sanlorenzo, now may well be the ideal time to float the company. The group recorded a growth in turnover from €300 million in 2017 to €380 million in 2018, and is estimating a further 20% growth in 2019. It’s order portfolio for 2019-2020 is €500 million.Massimo Perotti Sanlorenzo CEOSanlorenzo returned to wholly Italian ownership at the beginning of 2019 after Perotti bought back shares acquired by third-party stakeholders in recent years. He now owns 96% of Sanlorenzo through a family holding company co-owned with his two children. The remaining 4% is held by the Sanlorenzo management.

 “The market is positive”, said Perotti in a recent interview with the daily newspaper Il Giornale. “There was a slight slowdown at the end of 2018, but the first quarter of 2019 has done away with any doubts and in terms of orders and market activity I expect 2019 to be a good year, perhaps even better than 2018.”

The rumoured listing of Sanlorenzo follows ongoing reports that the Ferretti Group is also preparing for a return to the Milan stock exchange. Delisted in 2003, the group was owned by private equity firms before being bought by the Chinese industrial conglomerate Weichai Group in 2012. Under Chinese ownership, the yacht builder has paid off its debt and returned to profit in 2016.SanLorenzo Superyacht division shipyard in La Spezia Photo: Merijn de Waard / SuperYacht TimesFerretti reported a production value of €623 million in 2017, representing an increase in core profit of 11% with net profit jumping 71% to €24 million. This upswing in profitability and the positive outlook for the luxury yacht market in general prompted the group to acquire Wally Yachts through an exclusive licencing agreement at the start of 2019.

"The listing is an opportunity,” said Ferretti CEO Alberto Galassi when presenting the company’s 2018 results. “Our Chinese investor sees it as a natural evolution of its investment. It’s up to shareholders to decide, and then we will execute,” At the time, the formal process for the initial public offering had not yet started, but Weichei is expected to reduce its shareholding with the IPO. 

The main advantage of going public is that it can raise significant capital for a company to expand, but being listed on a major stock exchange also carries considerable prestige and usually only private companies with proven profitability potential qualify for an IPO.Alberto GalassiPhoto: Custom Line SpAThere are downsides as well, however. The increase in regulatory oversight and scrutiny from investors constantly look for rising profits can affect the way a successful business is managed. Timing is also critical and market pressures may force public companies to focus more on short-term results rather than long-term growth.

The Bénéteau Group, the world's largest manufacturer of sailing yachts and leisure craft, went public in 1984 on the Paris Stock Exchange (although the Bénéteau family retained control of the company). In February, the stock market reacted negatively to the group’s 2018-19 outlook in which the French builder projected a slowdown in the global boat market, despite an increase in orders. The company’s share price tumbled 21% in the 24 hours following the announcement.



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