Ferretti: yachtmaker is setting sail against political headwinds
China’s increasingly wealthy population forms an important part of boat builder’s plan
Synonymous with wealth and power, superyachts are in the spotlight as the ill-gotten gains of Russian oligarchs placed under sanctions. Italian boat builder Ferretti is not letting that sink its plans. The group announced pricing for a Hong Kong initial public offering this week with a valuation of up to $1.2bn.
Ferretti’s timing looks odd. Hong Kong yacht owners too, desperate to escape strict Covid-19 rules there, are rushing to sell or transport their vessels out of the city as quickly as possible. At the same time, Russian-owned yachts struggle to find safe harbours worldwide. Sanctions against wealthy Russians hint that demand to buy more may slip in the year to come.
Yet below this choppy surface things have rarely been better for boat builders. Booming global financial markets further enriched billionaires. Sales of superyachts, those usually more than 24 metres in length, reached new highs last year.
Ferretti has little exposure to the supersized yachts favoured by the likes of Roman Abramovich and Alisher Usmanov. The few mega yachts the group does build are under the flag of its CRN brand. But vessels more than 100m long represent under a tenth of sales. Most of the group’s turnover came in the 20m to 50m categories.
Ferretti’s strong growth last year expanded sales by half. On its trailing earnings the top-end valuation of $1.2bn puts Ferretti on an enterprise value-to-ebitda multiple around 12 times. That looks a tad pricey by comparison with powerboat makers such as MasterCraft but in line with luxury groups such as LVMH, Kering and Richemont.
As for most purveyors of toys for the rich, China’s increasingly wealthy population forms an important part of Ferretti’s plan. Listing in Hong Kong will partly reflect this and its ownership by the state-controlled Weichai Group. Even so, in the current environment, Ferretti’s shares will require some keen pricing to get them out of the showroom.