(Tiper Stock Exchange) – RedFish LongTerm Capital (RFLTC), a holding company of industrial investments with a long-term horizon, aims at listing on the Stock Exchange to accelerate the acquisition of shares in Italian SMEs and expand its investment sectors, convinced that there is a large pool of entrepreneurs ready to open the capital of their companies and of its ability to compete effectively with private equity firms larger. The company – founded in 2020 by Paolo Pescetto (president), Andrea Rossotti (CEO) together with the Bazoli and Gitti families – should land on Euronext Growth Milan in the second half of June, after a harvest in capital increase to which must be added the conversion of a bond into an IPO. The operation is followed by MIT SIM as Euronext Growth Advisor and Global Coordinator.
“Our experience began as an advisor in the world of private equity and club deal investments, but the upheavals on the markets in recent years have made us understand that the season of club deals with investment in a single target is a bit over and now we find diversified holding companies are much more interesting“, explains to Finance Paolo Pescetto, who has more than 10 years of experience in M&A with Arkios Italy (of which he is co-founder) and more than 15 years of experience in strategic consulting with The Boston Consulting Group and with Value Partners. “RFLTC will allow investors’ exit based on personal choice and not linked to that of others, as occurs in club deals or other forms of private equity – he adds – Once a company is listed, each investor can decide whether or not to remain within the asset class”.
RFLTC specializes in acquisitions of Italian family-run SMEswhich are characterized as mature companies (EBITDA exceeding 2 million euros), and who are driven by the desire to pursue new stages of development and approach the world of acquisitions both in Italy and abroad. Since July 2020, RFLTC has made 7 acquisitions in leading Italian companies, of which participate today: Convergences (2020), Telco active in fiber and connectivity; Tesi (2021), active in the structural aerospace segment; solid world (2021), active in 3D printing with software and hardware; Expo Inox (2022), active in steel flues; Movinter (2023), active in components for high-speed trains. In 2022 it is decided to sell the shares in MaticMind and Pistachio.
“RFLTC intervenes on companies that already have a consolidated business but that are approaching the capital market for the first time and that do not have internal funds – says Pescetto – And that want a player to accompany them in a process of structuring activities, both from a managerial point of view and from a process control point of view, such as an information system, management control, independent directors. All of this often coincides with the accompanying listing on the Stock Exchange”.
RFLTC is just one of the companies in the RedFish group that has chosen to to dominate the market with different vehicles depending on the size and characteristics of the target companies. They are also part of the group I-RFK, a holding company already listed on the Paris Stock Exchange and which focuses on innovative scale-ups, and RF4Listing, which invests in SMEs in the IPO phase. RF4Listing is also set to go public, probably late this year or early next.
At the moment, however, all efforts are focused on RFLTC, with Pescetto and Rossotti who will meet investors shortly. One of the most interesting aspects, explains the chairman, is to bring out the differences compared to other entities that invest in SMEs: “Our ideal target is those companies with an EBITDA of 3 to 10 million euros, where it is true that there is a lot competition from medium-sized private equity, but we must not forget that the offer of companies is very broad.Moreover, we are perhaps more in competition with the listing, as we are not interested in situations where the entrepreneur has already decided on a sales plan and does not intend to make a growth program in 10-15 years”.
“Furthermore – he adds – we are bringing to the market a long-term partner for SMEs, which does not see the IPO as an exit, so much so that in Convergenze and SolidWorld we have signed 2-3 year lock-ups: it is something that a private equity firm would never sign, because it would go too long on the exit period. It’s a different approach and therefore we are not in competition with the closed fund which has strict exit rules”.
RFLTC closed the 2022 (pro forma consolidated data) with a useful equal to about 7 million euros and a net assets approximately 25 million euro, corresponding to a value per share of 1.64 euro (with a total invested amount of 15 million euro and available cash of 20 million euro). According to Finance, thecapital increase functional to the listing will be up to 6 million euro, while the conversion of the debenture loan into IPO will amount to 3 million euro.
THE IPO proceeds will be placed at the service of the characteristic activity of the company. “We would like to enter new sectors, even if we have not currently formulated new binding offers – explains Pescetto – We do however have contacts that we hope will turn into operations soon, in sectors that may be those that distinguish Italian excellence, which we see in mechanics, fashion and pharma. Then add-on operations are certainly planned by the subsidiaries, certainly in the aerospace and railway transport sectors, which are enjoying an extremely favorable moment of market consolidation”.
The goal of RFLTC is to do new acquisitions in sectors not yet covered and at the same time carrying out at least one acquisition a year of the investee companies, where often the professionals of the holding company take on the powers of extraordinary finance within the Board of Directors of the investee companies.