The Benettons and Goldman Sachs were meeting in New York on Thursday and Friday to decide how best to vet and choose investors who want to put up billions of euros to join the Italian family in its latest venture.
The Benettons, famous for their clothing company, are on the move again after months of delays and disappointments over their investments in the Italian motorway network and in Telecom Italia.
Goldman's private equity wing has already put in €1bn ($1.4bn), about a quarter of the amount being sought for investments in global infrastructure assets from toll roads to airports and railway stations.
It is the most dramatic change in the Benettons' empire since the four siblings from north-east Italy founded their clothing group in the 1960s.
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The family has also been joined by Mediobanca, the Italian investment bank, which has put in €300m. They want another €2.7bn.
Gilberto Benetton, one of the siblings, said this week: "We are aiming to sell up to 49 per cent [in the venture] and we are looking for three partners, possibly from Asia, the Middle East and eastern Europe who will bring business and not just financial resources."
The Benettons are worth more than €9bn, half of which is in their global clothing business and half is in Italian infrastructure.
They are also present in Telecom Italia, a bad investment which started in 2001 and has cost them €1bn in writedowns as the value of telecoms assets has shrunk.
The Benettons are staying in the controlling shareholder group as it changes hands from Pirelli, the tyre company, and its partners to a consortium including Telefónica, the Spanish telecoms company. Regulatory delays continue to hold up the transfer of control and T Italia has been in limbo for months.
The family's other interests run from Atlantia, the company which operates the majority of Italy's motorway toll roads, to airports in Rome, Florence and Turin and a share in 13 of the country's main railway stations. They also control Autogrill, the roads and airports caterer.
The first effort to make the portfolio more international fell apart last year. Atlantia, then called Autostrade, saw its merger plans with Abertis of Spain scuppered by the Italian government. Rome, which is being investigated by the European Commission over the affair, announced a wide-ranging review of the economics of toll road concessions.
While the review was running, it made Atlantia's future profitability impossible to assess, and the merger hard to conclude.
The threat of losing the concession has recently been lifted, with Atlantia reaching an agreement with the government which could be passed by parliament next year.
But it is probably too late to revive the Abertis deal. The Spanish strategy has moved on, and so has that of the Benettons.
For the first time the Benettons want to dilute their holdings substantially to allow in others. The infrastructure side of the business, named Sintonia, is broadly doubling its capital base from €4bn to €8bn, and being supplemented by €2bn borrowed from the Royal Bank of Scotland.
People close to the family say they were jolted by the bad publicity arising from the Atlantia dispute with the government. Antonio Di Pietro, the infrastructure minister, made much of allegations that Atlantia had been taking toll money but failing to invest it in the network as promised.
The company admits it is hundreds of million of euros behind in its investments, but blames regulatory and planning delays. The finger-pointing and bad publicity is going to continue for a long time.
Of 3,800km of motorway under Atlantia's control, only 800km has more than two lanes on each side. While the rest is being upgraded slowly in coming decades, the Benettons hardly want to be perceived as foot-dragging profiteers rather than path-breaking purveyors of fashionable clothing.
One person close to the family said: "We want to separate the joy of buying clothes from the pain of paying for tolls."
Outside investors would also help to secure the future of the Benettons' fortune by bringing in hard-nosed and long-term financial partners.
This is linked to generational change; the siblings are not getting any younger. Luciano Benetton, who is 72, has already handed over control of the clothing company to his son Alessandro. Gilberto Benetton, who has been in charge of the investments, is 66.
So what is the pitch for new investors? The deal with the government has cleared the air over Atlantia, which accounts for about 75 per cent of the Benettons' infrastructure investments.
Rome's airports have also recently seen a power struggle resolved. The Benettons and partners bought out the share held by Macquarie, the Australian bank.
But although passenger traffic is set to treble over 20 years, there is uncertainty over Alitalia, the ailing airline, and airport concessions in general.
That uncertainty also afflicts Turin and Florence airports, the family's other existing investments.
Part of the attraction of the scheme is the investment opportunities outside Italy.
As Gilberto Benetton implied, Sintonia's partners will be expected to open doors around the world.
The selection of new investors will probably continue until the middle of next year.
After that, people close to the company say, if Abertis and Atlantia want to revive their merger, the Spaniards can be absorbed into the new financial structure.
Thursday, October 18, 2007
Burberry Sales Climb
Oct. 16 (Bloomberg) -- Burberry Group Plc, the luxury-goods maker whose founder created gabardine fabric, said second-quarter sales rose 9 percent as the company added metal-studded Knight handbags alongside its range of tailored trench coats.
Revenue climbed to 281 million pounds ($573 million) in the three months through September from 257 million pounds a year earlier, the London-based company said today. The stock fell as Burberry said it will spend about 4 million pounds more than planned this year to improve computer systems.
``This was a solid, although not flawless, trading update,'' Andrew Wade, an analyst at Seymour Pierce in London, wrote in an e-mailed note. He maintained his ``hold'' rating on the stock.
Chief Financial Officer Stacey Cartwright said accessories sales rose 35 percent in the fiscal first-half as the company introduced Knight bags for 1,595 pounds and Beaton styles for 1,095 pounds. Burberry opened 11 shops in the first half to add to revenue from its own outlets, which is more profitable than sales through wholesale customers such as department stores.
Burberry shares dropped 17.5 pence, or 2.6 percent, to 648.5 pence in London. The stock has added 20 percent in the past year, the fourth-biggest advance in the 14-member Bloomberg European Fashion Index, which has gained 11 percent.
Atlas Plan
The cost of installing new computer systems will be about 19 million pounds this year, more than Burberry's previous estimate of 15 million pounds, the statement shows. The company delayed introducing a factory warehouse system in September to avoid potential disruption of the large quantities of goods being handled, Cartwright said on a conference call.
Total costs of the so-called Atlas plan will remain at about 50 million pounds over three years, and about 20 million pounds will be added to profit as expected in fiscal 2008, Burberry said.
Cartwright said that the company is ``comfortable'' with analysts' estimates for earnings before interest and taxes of about 210 million pounds this year, before costs of the Atlas program, reiterating previous targets.
The second quarter sales figures were a ``positive surprise,'' said Nicole Quinn, an analyst at Morgan Stanley in London who gives Burberry stock an ``overweight'' recommendation. She singled out the 35 percent gain in accessories revenue.
Store Openings
Store openings expanded Burberry's selling space by about 12 percent in the first half as the company sought to catch up with Louis Vuitton, which has almost 50 percent more outlets. Burberry plans to open stores in Budapest, Copenhagen, Los Angeles and in Florence and Venice in Italy during the second half.
The U.K. luxury goods maker promoted more expensive outerwear styles, such as the studded trench coat singer Jennifer Lopez wore to Radio City Music Hall last month.
Cartwright said Burberry expects wholesale sales to rise in the ``mid-teens'' excluding exchange rates in the second half.
First-half sales rose 15 percent to 449 million pounds from 392 million pounds a year earlier, matching the median of five analysts' estimates compiled by Bloomberg. The performance was ``consistent with'' its annual profit forecast, the company said.
Revenue climbed 20 percent at the company's own stores and accounted for 45 percent of total sales, Burberry said. Wholesale revenue gained 14 percent. Store sales usually are stronger in the company's first and third quarters because wholesale orders are booked in its second and fourth quarters.
Revenue from licensing its name for use on goods such as perfume fell 3 percent in the half, according to Burberry, which outfitted Norwegian explorer Roald Amundsen's expedition to the South Pole in 1911.
Cartwright said the company expects to spend between 20 million pounds and 30 million pounds buying back its own shares in the second half after repurchasing stock worth about 40 million pounds in the first six months.
Revenue climbed to 281 million pounds ($573 million) in the three months through September from 257 million pounds a year earlier, the London-based company said today. The stock fell as Burberry said it will spend about 4 million pounds more than planned this year to improve computer systems.
``This was a solid, although not flawless, trading update,'' Andrew Wade, an analyst at Seymour Pierce in London, wrote in an e-mailed note. He maintained his ``hold'' rating on the stock.
Chief Financial Officer Stacey Cartwright said accessories sales rose 35 percent in the fiscal first-half as the company introduced Knight bags for 1,595 pounds and Beaton styles for 1,095 pounds. Burberry opened 11 shops in the first half to add to revenue from its own outlets, which is more profitable than sales through wholesale customers such as department stores.
Burberry shares dropped 17.5 pence, or 2.6 percent, to 648.5 pence in London. The stock has added 20 percent in the past year, the fourth-biggest advance in the 14-member Bloomberg European Fashion Index, which has gained 11 percent.
Atlas Plan
The cost of installing new computer systems will be about 19 million pounds this year, more than Burberry's previous estimate of 15 million pounds, the statement shows. The company delayed introducing a factory warehouse system in September to avoid potential disruption of the large quantities of goods being handled, Cartwright said on a conference call.
Total costs of the so-called Atlas plan will remain at about 50 million pounds over three years, and about 20 million pounds will be added to profit as expected in fiscal 2008, Burberry said.
Cartwright said that the company is ``comfortable'' with analysts' estimates for earnings before interest and taxes of about 210 million pounds this year, before costs of the Atlas program, reiterating previous targets.
The second quarter sales figures were a ``positive surprise,'' said Nicole Quinn, an analyst at Morgan Stanley in London who gives Burberry stock an ``overweight'' recommendation. She singled out the 35 percent gain in accessories revenue.
Store Openings
Store openings expanded Burberry's selling space by about 12 percent in the first half as the company sought to catch up with Louis Vuitton, which has almost 50 percent more outlets. Burberry plans to open stores in Budapest, Copenhagen, Los Angeles and in Florence and Venice in Italy during the second half.
The U.K. luxury goods maker promoted more expensive outerwear styles, such as the studded trench coat singer Jennifer Lopez wore to Radio City Music Hall last month.
Cartwright said Burberry expects wholesale sales to rise in the ``mid-teens'' excluding exchange rates in the second half.
First-half sales rose 15 percent to 449 million pounds from 392 million pounds a year earlier, matching the median of five analysts' estimates compiled by Bloomberg. The performance was ``consistent with'' its annual profit forecast, the company said.
Revenue climbed 20 percent at the company's own stores and accounted for 45 percent of total sales, Burberry said. Wholesale revenue gained 14 percent. Store sales usually are stronger in the company's first and third quarters because wholesale orders are booked in its second and fourth quarters.
Revenue from licensing its name for use on goods such as perfume fell 3 percent in the half, according to Burberry, which outfitted Norwegian explorer Roald Amundsen's expedition to the South Pole in 1911.
Cartwright said the company expects to spend between 20 million pounds and 30 million pounds buying back its own shares in the second half after repurchasing stock worth about 40 million pounds in the first six months.
Sunday, October 14, 2007
Factory Outlet Centre in Hobart?
The future of a $100 million retail development near Hobart is in doubt after it was approved by the federal government but then immediately dropped by the developer.
Austexx wanted to construct a 17,000 square metre direct factory outlet (DFO) on commonwealth land near Hobart Airport.
Federal Transport Minister Mark Vaile said Tuesday the plan for the construction of a major retail centre had been approved but the size had been cut to about 10,000 square metres.
Austexx said in a statement that it was not prepared to reduce the retail space, based on the larger sizes of its five other successful DFO outlets around Australia. The development had provision for a bulky goods centre, factory outlet shopping and a homemakers centre.
"My decision follows extensive public consultation undertaken by Hobart Airport last year and takes into account the comments made during the process," Mr Vaile said.
"My decision to approve an area smaller than the 18,000 square metres applied for will provide a beneficial development for Hobart while limiting the impact on existing retailers," Mr Vaile said.
The single storey development would have combined the airport retail centre and provided parking for up to 2,300 cars.
Tasmania's Treasurer Michael Aird said he was disappointed that Austexx had decided not to proceed with the DFO.
"The Tasmanian government will continue to do everything we can for Tasmanian consumers," Mr Aird said.
"We will be working hard to breathe life back into this project to make it viable."
He said the Austexx proposal would have been a significant development for the state economy and Tasmania's consumers would be the big losers.
"I understand that Austexx wanted 17,000 square metres and that the 10,000 square metres approved by the federal government is not sufficient to meet their needs," Mr Aird said.
"I hope that the opportunity is not lost forever and that the project can be resurrected after the uncertainty of the federal election is over."
Austexx wanted to construct a 17,000 square metre direct factory outlet (DFO) on commonwealth land near Hobart Airport.
Federal Transport Minister Mark Vaile said Tuesday the plan for the construction of a major retail centre had been approved but the size had been cut to about 10,000 square metres.
Austexx said in a statement that it was not prepared to reduce the retail space, based on the larger sizes of its five other successful DFO outlets around Australia. The development had provision for a bulky goods centre, factory outlet shopping and a homemakers centre.
"My decision follows extensive public consultation undertaken by Hobart Airport last year and takes into account the comments made during the process," Mr Vaile said.
"My decision to approve an area smaller than the 18,000 square metres applied for will provide a beneficial development for Hobart while limiting the impact on existing retailers," Mr Vaile said.
The single storey development would have combined the airport retail centre and provided parking for up to 2,300 cars.
Tasmania's Treasurer Michael Aird said he was disappointed that Austexx had decided not to proceed with the DFO.
"The Tasmanian government will continue to do everything we can for Tasmanian consumers," Mr Aird said.
"We will be working hard to breathe life back into this project to make it viable."
He said the Austexx proposal would have been a significant development for the state economy and Tasmania's consumers would be the big losers.
"I understand that Austexx wanted 17,000 square metres and that the 10,000 square metres approved by the federal government is not sufficient to meet their needs," Mr Aird said.
"I hope that the opportunity is not lost forever and that the project can be resurrected after the uncertainty of the federal election is over."
Friday, October 12, 2007
Richmond Victoria Profile
Richmond is one of the city’s earliest settlements, and is a vibrant suburb based around food and fashion. Best known for its bargain designer and seconds shopping along Bridge Road and Swan Street, Richmond is home to the factory outlets and seconds stores for many of Australia’s finest fashion and accessory designers, including Mimco and Country Road.
Also on Swan Street and Bridge Road you can find a range of eateries from restaurants to cafes, many offering a genuine taste of Greece.
Nearby Victoria Street is known as Little Saigon and is the heart of Melbourne’s Vietnamese community. The long stretch of eateries, bakeries, butchers, fishmongers and grocers starts at Hoddle Street and extends to the Yarra River in nearby Abbotsford. But don’t expect white linen tablecloths and hovering waiters – Victoria Street is about the hustle and bustle of fast, fresh and exceptional Asian food at a bargain price. Wander through the Asian groceries or stop for Vietnamese snacks including crisp rice paper rolls or a steaming bowl of pho.
Victoria Bitter and Fosters beer buffs can take a tour through the Carlton & United Breweries’ brewhouse in Abbotsford.
How to get thereTram: Number 70 from Flinders Street to Swan Street or number 109 from Bourke Street to Victoria Street, number 48 or 75 tram from Flinders Street to Bridge Road.Train: From Flinders Street Station to Richmond StationTravelling time: 10 minutes
Also on Swan Street and Bridge Road you can find a range of eateries from restaurants to cafes, many offering a genuine taste of Greece.
Nearby Victoria Street is known as Little Saigon and is the heart of Melbourne’s Vietnamese community. The long stretch of eateries, bakeries, butchers, fishmongers and grocers starts at Hoddle Street and extends to the Yarra River in nearby Abbotsford. But don’t expect white linen tablecloths and hovering waiters – Victoria Street is about the hustle and bustle of fast, fresh and exceptional Asian food at a bargain price. Wander through the Asian groceries or stop for Vietnamese snacks including crisp rice paper rolls or a steaming bowl of pho.
Victoria Bitter and Fosters beer buffs can take a tour through the Carlton & United Breweries’ brewhouse in Abbotsford.
How to get thereTram: Number 70 from Flinders Street to Swan Street or number 109 from Bourke Street to Victoria Street, number 48 or 75 tram from Flinders Street to Bridge Road.Train: From Flinders Street Station to Richmond StationTravelling time: 10 minutes
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