IPO Alert: Zegna plans NYSE listing worth US$ 3.2 bn via SPAC

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IPO Alert: Zegna plans NYSE listing worth US$ 3.2 bn via SPAC

 IPO Alert: Zegna plans NYSE listing worth US$ 3.2 bn via SPAC
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  • Italian fashion group, Ermenegildo Zegna Group announced public listing plans on NYSE via a SPAC on Monday
  • Zegna will combine with a SPAC by private equity firm Investindustrial for the listing.

Ermenegildo Zegna Group, an Italian luxury fashion house revealed its plans on Monday of going public by combining with a special-purpose acquisition company (SPAC). The entity is expected to have an enterprise value of US$ 3.2 billion, including debt.

Zegna plans to merge with a SPAC owned by UK-based private equity company Investindustrial and publicly list on the New York Stock Exchange (NYSE). Zegna is a popular menswear luxury brand.

A company with no commercial activity and formed primarily for raising capital via an initial public offering (IPO) to acquire another company is termed as a SPAC. 

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Zegna IPO details

The fashion group said it would raise about US$ 880 million by combining with Investindustrial, while the Zegna family will retain up to 62 per cent of the combined entity following deal closure. The company has 296 stores located in about 80 different countries and was founded in 1910.

The Zegna family have been owners of the group for over 100 years and will also receive an approximate amount of US$ 550 million in the deal, whereas the fashion group will receive up to US$ 250 million to be utilised for future acquisitions.

Also, Investindustrial will hold an 11 per cent stake, and the remaining 27 per cent stake will be publicly traded on NYSE post listing.

Zegna’s US$3.2 billion enterprise valuation of the blank check company will comprise an estimated US$2.5 billion market valuation once it starts trading and a US$ 0.7 billion debt component of the entity.

The fashion group’s current CEO Gildo Zegna, will continue as CEO of the combined entity, according to the Zegna family.

The investment advisors for this deal includes global investment bank UBS for Zegna and Deutsche Bank AG, Goldman Sachs, JPMorgan and Mediobanca for Investindustrial.

Pandemic-related strategic shift

The IPO is seen as a sharp shift in strategy by the Italian company as the luxury goods sector has been severely impacted by the pandemic. The decision to list on a US exchange such as the NYSE stemmed from the company gaining more visibility in the Americas region.

The move also comes alongside a recent trend in consolidation within the luxury goods industry, as several mid-sized fashion companies have been acquired by their larger counterparts.

For example, fashion giant LVMH Moet Hennessy Louis Vuitton SE’s buyout of Tiffany and Company was completed in January this year and is called the largest deal in the luxury market. Also, Italian fashion house Versace was acquired by US based group Capri Holdings in 2018.

Zegna’s financial performance

Zegna’s 2020 revenue stood at EUR 1 billion, compared to EUR 1.3 billion in 2019, impacted by the covid-19 crisis. The company’s CEO stated the fashion house might also consider future buyouts and plans to bolster digital sales.

Zegna had recently acquired US based fashion brand Thom Browne, which focuses on womenswear and other areas.

The firm believes key luxury markets such as China and core revenue segments such as Thom Browne will help it recover the fall in revenues to 2019 levels. Zegna has forecasted its 2021 sales to touch around EUR 1.2 billion.

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