Exor’s €2.6bn Philips stake furthers Agnelli family healthcare push, says scion
John Elkann describes company’s latest deal as part of natural adjustment of carmaking dynasty’s portfolio
John Elkann, scion of Italy’s Agnelli dynasty, has said its €2.6bn investment in Dutch conglomerate Philips was part of a natural evolution for family holding company Exor as it focuses investments on the health, technology and luxury sectors.
This month’s acquisition of a 15 per cent stake in the Amsterdam-based medical devices group was Exor’s biggest deal since selling US reinsurer PartnerRe for €9bn in 2021 and marks a further push into healthcare by a family long considered European car industry royalty.
Elkann, great-great-grandson of Fiat founder Giovanni Agnelli and chair of both sprawling motor group Stellantis and luxury car brand Ferrari, told the Financial Times the expansion of Exor’s portfolio was part of an evolution after two decades spent placing the holding company on the right footing.
He added that Exor felt “a strong affinity for healthcare”, and that “early learnings” from its more than €800mn investment last year in privately held French healthcare group Institut Mérieux had “reinforced our conviction about the importance of this industry and its growth potential”.
Under Elkann’s grandfather Gianni Agnelli, who led Fiat for half a century from the late 1950s and was one of 20th-century Italy’s most influential figures, the family’s business became heavily skewed towards the car industry, expanding across eastern Europe and South America and acquiring brands including Lancia, Maserati and Ferrari.
However, Exor’s forerunner Istituto Finanziaro Industriale also held stakes in companies across the food, financial, consumer and real estate sectors, owning Turin’s daily newspaper La Stampa and Juventus football club, both of which Exor has retained.
Although the transformation of the family’s business had already been under way before Gianni Agnelli’s death in 2003, by the time Elkann joined the family holding company that year Fiat was debt-ridden, relations with its US partner General Motors had soured and the group’s future was in peril.
During 47-year-old Elkann’s leadership, Exor has increased its net assets from roughly €4bn in 2009 to €33bn this year while Exor shares went from single-digit figures to the current €80 per share.
Elkann now says the first decade after his grandfather’s death was one of conservation: “We focused on divestments, simplification and debt reduction to make sure that what we had could be saved.”
The decade that followed “was one of stabilisation” that he said had placed Exor on a steady growth trajectory.
Important changes within its portfolio companies over that period included the creation of agriculture equipment manufacturer CNH Industrial from the merger of CNH Global and Fiat Industrial; Fiat’s takeover of US rival Chrysler to form FCA; Ferrari’s spin-off from Fiat and its listing in Milan; the merger between FCA and Peugeot to create Paris-listed Stellantis; and finally, the acquisition and sale of PartnerRe.
“The portfolio was managed well over the last decade,” according to Equita analyst Martino De Ambroggi.
Stellantis, in which Exor is the largest shareholder with a 14 per cent stake, reported record first-half revenues of €98bn this year. Meanwhile, Ferrari shares have risen 40 per cent to €286 over the past 12 months.
However, analysts note that the Amsterdam-listed Exor is still trading at a 45 per cent discount to its net asset value.
“The current discount is a historical peak and it is very unusual for Exor,” said De Ambroggi, adding that “more clarity on the strategy for the non-listed assets in its portfolio might also help, but as John Elkann repeats, increasing the net asset value is the number one priority”.
Exor vowed to reinvest the proceeds of the PartnerRe sale across tech, luxury and healthcare and has taken a 24 per cent stake in luxury shoemaker Christian Louboutin, a majority stake in Chinese lifestyle label Shang Xia and a 45 per cent stake in Italy’s Lifenet Healthcare.
“We’re clearly looking to sectors that have the wind behind them,” said Suzanne Heywood, Exor’s chief operating officer and chair of CNH Industrial. “We have grown but we are still a lean, tight team [which] leads us to be very focused on where we want to invest.”
The group holds board seats on all its portfolio companies. “We describe ourselves as critical friends,” said Heywood. “We aren’t activists but we are active.”
Exor this year also made a return to financial services with the launch of Lingotto, a London-based investment firm chaired by former UK chancellor George Osborne to which it allocated an initial €1.5bn from the PartnerRe sale. The firm, in which PartnerRe’s new French owner Covea is also invested, has $3bn under management.
However, it has not been all smooth sailing. The sudden death of longtime Fiat chief Sergio Marchionne in 2018 was a “defining moment” which required multiple interventions “to see the companies right”, said one person close to Exor.
Juventus, meanwhile, which the Agnelli family has owned for 100 years, was hit by a series of indictments on charges including market manipulation and false accounting that led to the resignation of its board and a management reshuffle last year. Insiders say the issues were dealt with swiftly.
“John has emerged as someone who has taken on the doubters — and there were many back when his grandfather died — with actions rather than words,” said the person close to Exor.
With €2bn from the PartnerRe sale still left to spend, analysts expect the investment spree to continue and for Lingotto to grow in scale, alongside divestments of a few smaller non-core holdings.
“Of course, there’s no certainty about what lies ahead”, said Elkann. “What is clear for us is our purpose, which is to build great companies with great people.”