Menswear designer Zegna looks chic for his Wall Street debut

Shares of Italian luxury men’s clothing group Zegna rose on Monday as they debuted in the New York market, after the company finalized a merger with a U.S. blank check company in a deal to ‘an enterprise value of $ 3.1 billion.

In the afternoon, the shares were trading at $ 10.78, up 6.3% from their opening price, the shares were trading from the opening price of $ 10.24. The company said in a statement that the combined group’s initial market capitalization will be $ 2.4 billion.

The company announced its IPO plans last July.

Zegna CEO Gildo Zegna told a press conference that the registration would help the company accelerate the transition to “comfort clothing”.

“Products that last and perform, and we both are – it’s just about acceleration… this project will make us raise our voices and raise our bar,” he said.

The company aims to give its clothes more comfort and durability.
SOPA / LightRocket images via Gett

The group will remain focused on internal growth, without excluding external expansion paths which “correspond to its DNA”.

“The reason we’re here is that we need scale,” Zegna said. “But the new Zegna is a big startup… we have to focus our resources, our energies on it… no distractions. We have enough on our plate, but we will keep an open mind.

At a time when the coronavirus pandemic is wreaking havoc in global supply chains and inflating the price of natural resources, Zegna highlighted possible supplier acquisitions.

Gildo Zegna stands outside in a long jacket
Gildo Zenga, seen here at Paris Fashion Week, heads the company.
Getty Images

“If you don’t control the supply chain, you won’t get anywhere… raw materials are going to be increasingly scarce and more expensive,” said the CEO.

The Zegna family will hold a 66% stake in the group resulting from the merger with Investindustrial Acquisition, a special purpose acquisition company (SPAC) sponsored by private equity firm Investindustrial and chaired by the former CEO of UBS , Sergio Ermotti.

Investindustrial founder Andrea Bonomi said he and Ermotti presented their business proposal to Zegna in January at a meeting in the mountains, putting possible alternatives on hold until he returned with a response a few months later.

“Zegna was a dream for us,” he said.

The deal, announced in July, is the latest example of an Italian family-owned fashion company attracting outside investors to finance its expansion, increase marketing spending and compete with bigger players, after the industry has been hit hard. affected by the coronavirus crisis.

Zegna, founded in 1910 as a textile company and now a leader in luxury menswear under the family’s third generation, raked in gross proceeds of $ 761 million from listing, mostly from Investindustrial and others. participants in the transaction.

A Zegna store exterior
The Zegna family will retain a majority stake in the company.

As part of the overall deal, the luxury group raised $ 169 million of the $ 402.5 million initially raised by PSPC, as 58% of its investors got their money back – mass buyouts have been a common feature of this type of agreement in recent weeks.

A backing deal with outside investors helped close most of the gap, with a final enterprise value of $ 3.1 billion just below the $ 3.2 billion initially envisioned.

In recent weeks, several companies including Grab Holdings and BuzzFeed, which merged with PSPC entities to go public, have seen their shares plummet, as investors pull the rug under bloated stocks in blank check deals. frenzied Wall Street this year.

A Zegna banner announces the IPO on the New York Stock Exchange.
Zegna has followed the trend of merging with ad hoc acquisition companies.
Getty Images

The average buyout rate more than doubled to 58% in the fourth quarter from a year ago, according to Dealogic data, as many companies fail to meet high investor expectations.

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