February 25, 2013 12:31 pm

Bankers keep close ties with fashion houses

Families behind Italy’s brands prefer discreet dealmakers
©Bloomberg

When Ferruccio Ferragamo, scion of the shoemaking dynasty, runs through a list of those who helped make Salvatore Ferragamo one of the most successful initial public offerings of the luxury sector, one of the first people he name checks is neither a family member nor a local artisan. It’s his private banker.

Francesco Caretti, of Caretti & Associati, is one of a select few Milanese professionals who define the word consigliere for the families that are behind Italy’s best-known luxury brands.

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Mr Caretti, whose wood-panelled office sits between luxury goods stores on Milan’s Via Montenapoleone, has worked for the Ferragamo family for so long that people cannot remember a time when he was not there. The relationship runs so deep he sits on the board and owns shares in the company.

In the cobbled, narrow streets of central Milan, near the Scala opera house or the Armani flagship store on Via Manzoni, other consiglieri can be found behind closed, and often unmarked, doors.

There is Banca Leonardo, the European advisory boutique based in Milan and run by the star rainmaker Gerardo Braggiotti. There is also Mediobanca, the Milanese investment bank per eccellenza run by banker Alberto Nagel. Among lawyers there is Sergio Erede, of Bonelli Erede Pappalardo.

These men have certain traits in common. They rarely give interviews. They never speak on the record. They will never blurt out the family secrets, and shudder even to think of it.

Big national and international investment banks may be called on to support blockbuster deals. Credit Suisse’s then co-head of investment banking Luigi De Vecchi personally handled the sale of Bulgari to LVMH. Goldman Sachs advised on the stock market listing in 2011 of Prada in Hong Kong alongside the investment arm of Italy’s biggest retail bank Intesa Sanpaolo.

“But when you are considering selling a company that has been owned by the family for 100 years, the last thing the family wants is a brash US banker who is going to write up an ‘info memo’ and be sending it from London to New York to Shanghai,” says one senior banker speaking on condition of anonymity (demonstrating the sensitivity of the topic).

The sale of Brioni, the elite Italian tailor, to French luxury goods group PPR in 2011 is a case in point. Leonardo Group, headed by former Lazard financier Mr Braggiotti, handled the deal.

Mr Braggiotti, a lean, intense banker considered one of Europe’s best dealmakers of the past 20 years, had previously advised Italy’s Marzotto family on their bumper sale of Valentino to Permira in 2007, so Leonardo had a record of securing families, and often warring families, a profitable exit.

A chilling of relations between the Brioni clans had helped push them to look for a banker that could discreetly find them a new investor.

In the end, it was again a family solution that worked. In brokering a buyout of the tailor by PPR, understanding the sensitivity of the individuals involved was all. “This was not done over the table in London talking about ebitda margins,” says someone close to the deal.

Instead, François-Henri Pinault, the son of the French group’s founder, took tea with the 83-year-old matriarch behind the Brioni brand to close the transaction.

As it becomes increasingly clear to Italian family-run brands that Brioni is not alone, and if they want to be successful in the next 30 years, they have to be investing now – or finding partners to invest for them – Milan’s discreet consiglieri are gearing up.

The senior banker notes: “Families want absolute discretion. It’s never only a question of money, it’s a question of trusting their advisers implicitly.”

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