Ermenegildo Zegna to list shares on NYSE in $3.2bn SPAC deal

By

Sandra Halliday

Published
Jul 19, 2021

Activity is heating up in the Italian luxury fashion industry. Just a day after news that L Catterton will take a majority stake in Etro, Ermenegildo Zegna confirmed that it will list on the New York Stock Exchange and is combining with Investindustrial Acquisition Corp, which will be a minority shareholder with an 11% holding. 

A special-purpose acquisition company (SPAC) has been created in the US, giving the group an enterprise value of $3.2 billion and an equity value of $2.5 billion. The Zegna family retains control with a stake of around 62%. 

Following the Etro deal, in the changed post-pandemic world, it’s clear that high-end family-owned companies see the importance of getting heavyweight partners on board with plenty of luxury experience and the ability to add investment cash to their businesses. But the Zegna news also follows a trend that's been seeing large numbers of fashion-linked businesses at all price levels listing their shares on stock exchanges in both Europe and the US.

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As they highlighted the appeal of the business for shareholders, the two partners said the “successful acquisition of [the] Thom Browne brand demonstrates [the] strength of [the] group’s M&A strategy and ability to develop brands”. It acquired control of Thom Browne in 2018.

Since its founding in 1910, Ermenegildo Zegna has evolved from a producer of textiles and menswear into a major name in global luxury goods. 

And the Thom Browne acquisition signalled a big move beyond its namesake brand. Importantly, it also exposed it to a customer base with a bigger digital focus than its core brand had. And the company said it has doubled the Thom Browne label’s revenues since 2018.

As of the end of last year, the group had a presence in 80 countries through 296 directly operated stores, and this year, it expects annual sales “to approach those of 2019”. In 1991, Zegna was the first luxury menswear brand to open in China, and Greater China accounted for 35% of its apparel, accessories and textile revenues in 2019. 

It has also been growing fast in the luxury leisurewear segment, taking this category from 38% of sales in 2016 to over 50% in 2021 so far, “all while maintaining its leadership position in the heritage formalwear segment”. And it said it “has also successfully attracted a new generation of customers through partnerships and collaborations that have further elevated the brand’s name with younger consumers”.

Saying that the business will continue its focus on quality and sustainability, group CEO Ermenegildo ‘Gildo’ Zegna added: “Today’s announcement underscores the success of our strategy of continuously focusing on the group’s brand equity while also continuing to build upon our heritage, our ethos of sustainability, and the unique craftsmanship that has made our name synonymous with quality and luxury around the world. The Zegna family will remain at the company’s helm and we will continue to invest in creativity, innovation, talent, and technology in order to sustain Zegna’s leadership position in the global luxury market.” 

Andrea C Bonomi, founder of Investindustrial and chairman of the Industrial Advisory Board, said: “For over 30 years, Investindustrial has invested in and supported both growing and leading Italian brands. We believe in the strength of Made in Italy. With Zegna we identified a group that also includes both a strong family heritage and a leading position in sustainability – one of the pillars in [our] investment strategy. We are supporting the Zegna Group with a long-term commitment and a significant investment to back the company’s ongoing expansion and growth, with the goal of spreading Zegna’s unparalleled heritage and luxury craftmanship more broadly to customers around the world.”