It is a John Elkann projected towards the future, but who does not neglect the lessons of the past, the one who in his traditional letter to the shareholders traces the route of Exor, the holding company of the Agnelli family. It is not for nothing that Elkann quotes Heraclitus: “Nothing lasts, except change”. “Exor’s goal – writes the president and CEO – is to build large companies, which for us are those that operate according to the highest standards, that seek to renew and change, that stand out and at the same time act in responsible way “.
2020 has shown the importance of these characteristics and in particular has brought about a significant acceleration of the pace of change of the companies of the group. «At the same time – continues Elkann – we have continued to build our future by completing the takeover bid on Gedi and investing in Via Trasportation. We also finalized our first acquisition in mainland China, becoming the majority shareholder in the luxury lifestyle brand Shang Xia ». In the letter an announcement which is also a sign of hope and optimism. “If the success of the vaccination campaign allows it – it is written – we will meet our investors in person in Turin on November 30 at the Agnelli Foundation to discuss the past and the future”.
As always, the leader of the Agnelli in the letter makes a mix of balance sheets, forecasts and unpublished news. In one of the most significant passages of the letter, Elkann pays tribute to the late Sergio Marchionne, who contributed so much to the salvation, first, and then to the growth, then, of Fiat, which became FCA, laying the foundations for the birth of Stellantis together with Psa . “I am proud that we have successfully completed a merger of the kind that Sergio Marchionne recommended years ago in his” Confessions of a Capital Addict “, in which he argued for the need for consolidation in the automotive industry to enable more efficient use of capital. and a more effective competitive capacity – says Elkann – If Sergio were still with us today, I’m sure he would strongly approve the creation of Stellantis ». He continues: “I am honored to be its chairman and with Carlos Tavares at the helm as CEO, leading a proven and highly talented team, we have an exciting opportunity to shape the industry my ancestors helped create and the whose pioneering spirit still guides us today ».
Thanks to its size, Stellantis will be able to invest resources to offer new products thanks to a portfolio of renowned brands. In addition, it will also be able to significantly increase its current range of electrified models. This year, announces, president of the world‘s fourth largest automotive group, with 11 new high-voltage models, global sales of Bev and Phex vehicles are expected to nearly triple: from 139,000 to 400,000.
“As major shareholders of Stellantis and Via Transportation, we are at the heart of change and we have the unique opportunity to be able to take part in it in the next decade – underlines Elkann – In mobility, electric vehicles, next-generation air and space transport, the delivery with drones, the digitization of fleets, autonomous driving and all the underlying infrastructures linked to it (renewables, batteries, network infrastructures) are revolutionizing and in some cases revitalizing traditional sectors ».
Remaining in the auto sector, even if in this case we must use the parameters of luxury, Elkann recalls that Ferrari has become the most valuable company apart from Exor. “The board of directors – says Elkann, after recalling the great work done by the ex to Louis Camilleri, who retired in December for personal reasons – is making good progress in the process of selecting the right leader who will lead Ferrari towards a new era and towards even greater goals ».
But Exor is not just automotive. Elkann remembers the recent agreement with Christian Louboutin (luxury shoes and beyond). «We believe that there are new important opportunities in the future of the company. The management has developed an ambitious business plan that is based on the strengths of the company and that will allow it to grow in areas that show structurally favorable trends, such as in the Chinese market and in e-commerce ». And remaining in the sector, Elkann announces that Suzanne Heywood, in addition to continuing to hold the role of president of CNH Industrial, will be president of Shang Xia, another of the group’s new companies. “When we look for companies to invest in, we particularly look at their ability to grow and stay great. We believe that Shang Xia has that potential, supported by a very clear ambition: to create the first global Chinese brand in the luxury lifestyle sector ». After all, Chinese consumers, as Elkann explains, today represent one third of spending in the luxury sector and it is expected that this percentage will grow to at least half of the total, with the Chinese market reaching 95 billion euros by 2025. Exor, with its subsidiaries and investee companies, wants to have its say.
And here we go back to the beginning. The interest of the group led by Elkann for companies of the 21st century, innovative start-ups, led to the birth of Exor Seeds, an investment business in early and late stage startups, under the leadership of Noam Ohana since 2017. “From his birth – underlines the president and CEO of Exor – we have invested about 250 million dollars in 42 companies around the world, about half of which in the United States, a third in EMEA and the rest in Apac and Latin America ». Two of Exor’s biggest investments in 2021 are building European leaders in real estate and healthcare technology.
In 2020, however, Exor also invested in a more mature sub-fund. Exor Equity Funds reached the $ 1 billion capital gains milestone, with a 4-year gross return of 174.4% in dollars (28.5% yoy). Among the most significant investments, Ocado in the United Kingdom (online food purchases), platinum mines and Rolls-Royce (aircraft engines). The crisis has accelerated a global shift in consumer preferences regarding online food shopping, creating new opportunities for Ocado. As a result, Ocado’s share price has grown 8 times the value of our initial investment.
In the case of platinum mining companies, the pandemic initially caused their shares to drop sharply, but stock prices then recovered sharply, hitting new records on the back of resilient demand.
Finally, the aircraft engines, reviving the epic of Fiat Avio. Rolls-Royce is the second largest producer of civil aircraft engines in the world, after General Electricm, and also has important activities in defense and power systems. It was hit particularly hard by the Covid-19 crisis, which occurred at a time when the company was recovering from engineering problems affecting the new Trent 1000 engine family. The company has taken drastic managerial decisions, with cuts costs at all levels and a repositioning of the portfolio. “Looking to the future – concludes Elkann – we believe that Rolls-Royce is now in a position to maintain its share of about 50% in the interesting market for wide-body aero engines, also substantially improving its cash generation thanks to the recovery of flight hours ».