28.08.2024-
Original-Research: RedFish LongTerm Capital S.p.A. (von GBC AG): Buy
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Original-Research: RedFish LongTerm Capital S.p.A. - from GBC AG
28.08.2024 / 10:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.
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Classification of GBC AG to RedFish LongTerm Capital S.p.A.
Company Name: RedFish LongTerm Capital S.p.A.
ISIN: IT0005549354
Reason for the research: Management Interview
Recommendation: Buy
Target price: 2.92 EUR
Target price on sight of: 31.12.2025
Last rating change:
Analyst: Matthias Greiffenberger, Cosmin Filker
'RFLTC aims to reach a market capitalization of EUR150 million by pursuing
additional fundraising and focusing on new acquisitions'
RedFish LongTerm Capital S.p.A., based in Milan, is an industrial holding
company specializing in the acquisition of family-owned Italian SMEs. RFLTC
targets mature businesses with the potential for significant growth and
expansion into both domestic and international markets.
GBC AG: Can you provide a comprehensive overview of RedFish LongTerm Capital
S.p.A., detailing its primary activities, mission, and the factors that make
the company unique?
RedFish LongTerm Capital S.p.A. (RFLTC) is a listed investment holding
company with a focus on industrial family-owned SMEs. Founded in 2020 by
Paolo Pescetto, Andrea Rossotti, and the Bazoli Gitti family, RFLTC is
committed to long-term investments, acquiring both qualified minority and
majority stakes, including through Club Deals.
Our strategy centers on acquiring stakes in companies where the RedFish team
of experts can make a meaningful impact through their competencies. We
prioritize opportunities where market dynamics support a build-up strategy
through M&A activities.
RFLTC is designed to preserve and maximize value, thanks to a lean cost
structure and a remuneration system linked to the appreciation of the
company's listed shares (via stock option plans) and an incentive structure
based on dividend distribution to shareholders.
GBC AG: What are the main criteria that RedFish LongTerm Capital uses to
identify and select its target companies for acquisition?
RedFish LongTerm Capital acts as a long-term industrial partner for its
subsidiaries, aiming to grow its portfolio companies without predetermined
exit periods. Capital is raised through dedicated increases, without relying
on pre-committed investor funds. This approach allows RedFish to engage in
deals with entrepreneurs who aren't seeking a typical Private Equity
investor but are instead looking for long-term partners. These partners are
committed to accompanying the company on a 'safe' journey toward an organic
and inorganic growth plan, including cross-border M&A deals.
Our long-term investment horizon enables RFLTC to enter new investments at
attractive, low entry multiples (currently averaging 4.96x EV/EBITDA).
Entrepreneurs are reassured by the possibility of generating value through a
long-term partnership with RFLTC and its industrial expertise.
We primarily target family-owned SMEs operating in niche markets with
significant business know-how, where the RFLTC team can leverage its
experience in driving growth through M&A strategies.
GBC AG: Could you provide details on your most recent acquisitions and
explain how these acquisitions fit into your overall investment strategy?
RFLTC's latest acquisition is a minority stake (15%) in INDUSTRIE POLIECO
MPB S.p.A.
Founded in 1977, Polieco Group is a family-owned company based in Northern
Italy and is the leading producer in Italy of double-wall corrugated
polyethylene piping systems. Additionally, the company manufactures resins
for pipe coatings and the packaging sector. In 2023, Polieco Group achieved
EUR200 million in revenue, EUR45 million in EBITDA, and maintained a net
financial position of zero.
The company's business model is divided into two units:
* Piping Systems (58% of revenues): Focused on the design and
manufacturing of conduits for electrical and telecommunications
installations in residential buildings, along with piping solutions for
sewage systems ('Ecopal' systems) and manhole covers.
* Resins (42% of revenues): Specializes in the production of resins used
for lining Oil & Gas pipeline tubes and adhesives for various
industries, including food packaging, cosmetics, and pharmaceuticals.
This acquisition aligns perfectly with our strategy due to: (i) the
favorable entry multiple we negotiated, (ii) the potential for pursuing a
cross-border M&A strategy in partnership with the existing management, and
(iii) the company's low debt and high cash flow generation within its niche
market.
GBC AG: Can you elaborate on the strategic importance and performance of
some of your key portfolio companies?
One of the key portfolio companies of RFLTC is Movinter S.p.A., through
which RFLTC is driving an aggregation project in the railway and naval
sectors, leveraging its industrial expertise. Movinter, a 100% owned
company, was acquired in April 2023 with a turnover of EUR22 million,
specializing in light carpentry production for railway and subway carriages.
In November 2023, Movinter acquired Six Italia, a EUR15 million company
specializing in "special materials" for the railway and naval industries.
This was followed by a second acquisition in June 2024, when Movinter
acquired Saiep S.r.l., another EUR15 million company specializing in electric
solutions (cabling) for railway trains.
This build-up strategy aims to create a group that can introduce production
and product synergies, allowing Movinter to transition from offering a
single product to providing a complex assembly. This 'one-stop shop'
approach positions Movinter as a single point of contact for major customers
like Hitachi and Alstom. With the acquisitions of Six Italia S.p.A. and
Saiep S.r.l., the group is now forecasting annual consolidated sales of over
EUR60 million.
GBC AG: What specific strategies does RedFish LongTerm Capital employ to
create value within its portfolio companies?
Our strategy focuses on (i) cross-border M&A through an add-on approach,
(ii) driving international expansion and (iii) providing strategic
consulting with our industry experts. We also prioritize (iv) strengthening
governance and management structures while (v) enhancing ESG awareness
across our portfolio companies.
GBC AG: What is your typical holding period for investments, and how do you
approach exits?
RFLTC has developed a unique industrial holding model that differentiates it
from traditional private equity funds (such as SICAF, ELTIF, SGR, or
financial holding companies). While RFLTC engages in similar activities like
raising capital and acquiring companies to support their growth, its focus
is distinctly on acquiring family-owned SMEs or companies undergoing
generational transitions, particularly those poised for further growth and
development.
What sets RFLTC apart is its hands-on approach to enhancing the operational
capabilities of its portfolio companies. This includes integrating key roles
such as a CFO with expertise in finance and banking, implementing a robust
management control system, appointing a manager who reports directly to
ownership, bringing in an international sales expert, and establishing an
ESG support committee that is currently being standardized across the Group.
These roles are often absent in companies of similar size, and RFLTC's
ability to provide these services adds significant value to its
subsidiaries-an approach highly appreciated by entrepreneurs.
Additionally, RFLTC distinguishes itself from financial operators through
its long-term investment horizon. Unlike typical financial holdings, RFLTC
does not rely on Drag-Along clauses or predetermined exit strategies. The
companies RFLTC acquires are often second or third-generation businesses
where the founders' legacy continues to be relevant for many years, aligning
with RFLTC's commitment to long-term growth and stability.
GBC AG: Which sectors do you consider most promising for future investments,
and why?
1. MADE IN ITALY: Family-run Italian SMEs in the Fashion and Interior
Design sectors have long been recognized as leaders in their niche
markets. These companies set themselves apart through their creativity
and top-tier production, representing excellence in 'Made in Italy'
craftsmanship.
2. ICT / INDUSTRIAL AUTOMATION: Following our co-investment in Matic Mind
alongside Fondo Italiano d'Investimento, RFLTC remains keenly interested
in the ICT sector and industrial automation. We are particularly focused
on digital operators and engineering companies that possess strong
competitive advantages and demonstrate significant growth potential.
3. FOOD: The Italian food industry remains highly fragmented, presenting
opportunities for consolidation through the acquisition of SMEs rooted
in Italy's rich food tradition. This sector continues to show resilient
demand both domestically and internationally, making it a strategic area
for aggregation projects.
Looking ahead, we are deepening our commitment to Movinter, where RFLTC is
building a group of companies active in the Railway, Aerospace, and Naval
sectors. Our goal is to create production and product synergies across these
subsidiaries, leading to significant cost savings and enhanced operational
efficiency.
GBC AG: Where do you see RedFish LongTerm Capital in the next 5-10 years,
and what are the key milestones you aim to achieve during this period?
RFLTC aims to reach a market capitalization of EUR150 million by pursuing
additional fundraising and focusing on new acquisitions. Our strategy
emphasizes sector diversification and a robust add-on policy for our
subsidiaries.
GBC AG: Thank you for the Interview.
You can download the research here: http://www.more-ir.de/d/30635.pdf
Contact for questions:
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Completion Date (Time): 27.08.2024 9:00
First Distribution Date (Time): 28.08.2024 10:00
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