Shipping

Still keen to float

Amid oligarch superyacht seizures Ferretti persists with Hong Kong IPO

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Ferretti: Chinese-owned boat firm

Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it,” David Lee Roth, lead singer of the rock band Van Halen, once quipped.

Big boat ownership has taken on a more troublesome turn in 2022, as Western governments hunt for the assets of oligarchs said to be connected to the Russian government.

At least nine superyachts have been seized so far, as others head for waters said to be safe from sanctions.

Ferretti Group, a high-end Italian yacht maker, cruised through these choppy waters last week to raise $243 million through an IPO in Hong Kong. It becomes the second Italian luxury brand to list in the city, following Prada which debuted in 2011.

The company, which was valued at just under $1 billion in the share sale, operates six shipyards in Italy, selling about 180 yachts a year to customers under brands that include Ferretti Yachts, Itama, Wally and Riva. It categorises its fleet into a couple of main groups: smaller composite and made-to-measure boats (priced from €700,000 to €20 million), as well as the larger superyachts that have been making  the headlines recently.

Ferretti has been keen to put some distance between itself and the oligarch fleet, pointing out that business with customers from Russia and the Ukraine was limited to just 3% of its total revenues over the past three years.

Fully customised vessels measuring more than 100 feet (about 30 metres) account for no more than 9% of its sales, it adds.

(The oligarchs own some truly gigantic vessels. Scheherazade – whose ownership is unclear but rumoured to be linked to Vladimir Putin –  measures 460 feet.  Eclipse, one of Roman Abramovich’s superyachts, is even bigger.)

Ferretti’s connections to China were cemented in 2012, when the Weichai Group, an engine manufacturer from Shandong, stepped in to save it from financial collapse, buying three-quarters of the company for €374 million. Pietro Ferrari, son of the car company’s founder Enzo Ferrari, still owns 11%.

Another five cornerstone investors from China have supported the IPO this month, with Sunshine Insurance and a number of Hainan-based state firms including Sanya Development and Hainan Free Trade Port Fund investing $129.5 million between them.

Ferretti says it will use the proceeds of the IPO to expand its range of yachts, as well as developing its services in areas such as yacht brokerage and chartering.

Its financial forecasts are also counting on much more interest from customers in the Asia-Pacific region. Nearly half of its operating revenues come from wealthy buyers in Europe and the Middle East, but the yacht maker is setting a new course for the 2.1 million ultra-high net worths and 60,000 extremely high net worths in Asia, it says, which make up a larger market than anywhere outside the Americas.

The region is now a “must fight” market for the luxury yacht manufacturers, says 36Kr.com. However, the Asia-Pacific rich will need to develop more of a habit of boat ownership first. Yacht sales per head of population trail all the other markets. In fact, the region’s share of Ferretti’s operating income dropped from 14.5% in 2018 to 5.2% in the first three quarters of 2021, 36Kr says.

Surely Ferretti will try to make inroad into Hainan province. The island’s tourism industry has been booming and its local legislature has just lifted a number of restrictions on the yacht industry this week. For example, foreigners resident in Hainan will be allowed to register yacht ownership in the free trade port. According to Xinhua, the changes reflect Hainan’s efforts to encourage the growth of the yacht industry in the province.

This explains the backing from several Hainan state firms in Ferretti’s IPO. The company ended its trading debut at HK$22.85, marginally lower than its HK$22.88 offering price.


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