New Electa fund launched with Azimut
More Italian savings on Italian companies. Simplification of procedures for the Italian SMEs’ debut on the Stock Exchange and innovative tools to involve private equity funds in financing the growth of our companies. These are some of the proposals of Simone Strocchipresident and managing partner of Elite Ventureswhich is developing the second vehicle in the IPO Club series. Strocchi was the first to launch the Spac model in Italy for listing companies on Piazza Affari and then to innovate it with the Ipo Club. And now he is ready for this fund to encore always closed with the big name in asset management Azimut at his side, because “the Italian ecosystem offers many investment opportunities”.
Economy Minister Giorgetti has also noticed this and wants to simplify the listing of SMEs on the Stock Exchange. What do you think?
The government will have to follow up on the Listing Act and therefore we hope that the conditions will be established for Italy to vary rules and regulations to give substance to the simplification of the procedures for listing on the Stock Exchange, both through a reduction in the documents to be presented and with a reduction in time. Time is an important factor and for this reason there are companies that have preferred to list their financial instruments in Ireland or in the Netherlands, where authorization times are much faster. I want to look to Italy, but I admit that we recently turned to Ireland to launch a bond issue, where in three weeks we had the go-ahead. Again, timing is important.
Especially Holland is becoming attractive for our large companies. She was the last to emigrate Exor.
Holland has also become attractive thanks to legislation guaranteeing multiple votes. I’m “lukewarm” on this issue, however, if we have to suffer the attack from Holland in this field, then it would be better to make the same objectives pursueable in Italy too.
With Electa you were the first to launch a Spac in Italy, but then you innovated the model. Why?
We were the forerunners of the Spac. With Made in Italy 1 we had great success listing Sesa, a solid IT group which when it entered the Stock Exchange had a market cap of 135 million euros while now, thanks also to a series of acquisitions, it is worth over 2 billion on the main list . Between 2017 and 2018 many followed our example and there was a tender to set up Spac, but, after raising the capital, many managers did not have operations already identified and therefore the vehicle, after 18/20 months, he was unable to close the coveted operation by giving way to small speculations. Do you think that the shares of vintage Spacs often ended up in the portfolios of bond funds interested in the comfort between the purchase price and guaranteed repayment. In short, the euphoria was over and the model needed some tricks.
Why did you decide to change the model?
We realized that SPACs had weaknesses and launched an evolution that we called the IPO Challenger. These are prebooking companies made up of financial entrepreneurs (us) who raise capital by issuing very short-term bonds. The objective is to offer bondholders a discretionary alternative for repayment with shares and warrants of the target company. The bondholders who adhere to the repayment in kind proposition thus determine the first float for the start of trading of the target company in a faster and more dynamic context than the laborious “business combination” which in traditional SPACs is completed following a merger process with the target with different executive complexities.
And how did it go?
With Ipo Challenger we have formed and brought to the list Italian Wine Brands, which have become the first private Italian wine group which, thanks also to a series of acquisitions, today produces 180 million bottles a year to proprietary brands with a turnover of over 430 million. But also Pharmanutra, which now capitalizes 600 million euros on the STAR, and Digital Value, the ICT group which has been growing at rates of 20% for 8 semesters and has started the procedures for the translisting from the Egm list to the main one. A step that makes us proud, because the underlying objective of all our operations is to be constructive finance, alongside the companies with which we grow together.
For the Ipo Challenger you allied yourself with the big del managed savings Azimut.
With Azimut in 2017 we created the Ipo Club fund which allows us to have financial coverage to cultivate a pipeline of companies to be listed through the formation of prebooks that we can also build “in the cloud”. Our role is that of first investors. We support companies in the listing process which we finance with our own capital and which we carry out through the formation of our prebooks in which the IPO Club fund acts as a cornerstone, guaranteeing between 20 and 30% of the collection, completed by the fund’s investors themselves – who participate at their discretion and directly to the operation – and by a selected number of institutions who now form a truly highly qualified ecosystem. With this formation we have supported successful operations to which we have recently added Magis, the latest debut on Piazza Affari in 2022, which has already given positive ideas with a double-digit growth percentage of the share value for initial investors.
But how do you behave with entrepreneurs?
From financial entrepreneur to industrial entrepreneur. We make a private negotiation and from that moment on the entrepreneur no longer has the chance to list or not. It is like creating a consortium of subjects interested in investing, a pool of investors who already know the company and are willing to accompany it in the listing process by forming and qualifying its free float.
How did Ipo Club 1 go?
It went well and the investors who followed us with full formula, investing both in the fund and in the individual prebooks, tripled their investment. Those who, on the other hand, have invested only in the fund are currently sitting on about 1.7 times the gross invested capital which, given the market trend over the last three years, seems to me to be an excellent result. Now we are about to start with Ipo Club 2 and I am amazed that no one has copied our model.
Yet in Italy there are few investors who they focus on freshmen or am I wrong?
In our country we have a large concentration of open funds which, however, for compliance reasons, are only looking for shares of companies that guarantee high liquidity, while freshmen by definition are not liquid. For this we need closed-end funds that invest in pre-hypo and in the first few years after the debut of these realities on the markets. We also have many private equity funds, which, however, are not interested in listed companies and consider the stock exchange limitedly and with little enthusiasm only in the exit phase. Our private equity funds do not take advantage of these investment opportunities on the stock market. Perhaps we should be more creative and create innovative corporate structures to involve them more, Private Investment in Public Equity (Pipe) formulas. Also to counter the predatory action of large international funds which in Italy look at the list essentially to finance delistings (OPA). I repeat, there is a need for closed-end funds and Eltifs that seize market opportunities, supporting winning business projects with a value perspective, essential for maintaining the Italian character of our best companies.
However, many of the companies that go public are really micro companies.
We have always accompanied companies that are not very small, already strong, to grow and make acquisitions. And many of these acquired companies would also have had the numbers to access the market stand-alone. But I think it’s important to create national and international champions, and making mergers on the stock exchange is easier. For example, this is what we did with IWB, which paid for its acquisitions both with cash and by card, making many entrepreneurs participate in a single large project.
What are the sectors that interest you?
In Italy there are several. To name two among many: mechatronics, where there is room to make aggregations, or the semi-finished products and food ingredients sector, which is also very interesting.
What do you think of the collapse of the Italian market a cause of svb failure?
I was thrilled with how sudden the response from the Italian market was. A panic that favors the interest of some speculators to “swing” the market to make money. Our Stock Exchange, unlike the American one, has an underlying of the Italian real economy and for this reason it is substantially healthy. In the United States, on the other hand, stock market capitalization insists on the real American economy for less than 1/3, a fact which gives the stars and stripes market a primacy of size, but which shows a high attendance of speculators from all over the world. the world. We, on the contrary, are an expression of somewhat provincial finance, but certainly constructive, and we pay great attention to selecting healthy companies and for this reason we must be proud of our contribution to the development of the productive fabric.
So he agrees with the government that he wants that Do Italians’ savings stay in Italy?
Of course, because I think that Italian savings can really be invested in our businesses and there are many opportunities to do so with excellent performance prospects.