Longmarch, a Luxembourg vehicle headed by Chinese investor Yushun Niu, and Camfin, Pirelli‘s shareholder with 10.1%, are in talks to create a strategic partnership in private equity activities, particularly in the healthcare sector, and to hold a further position in Pirelli around 10%. The companies have in fact signed a preliminary non-binding memorandum of understanding on the subject. The governance of the partnership will be up to Camfin and the exclusivity for the negotiations will last 60 days.
Camfin is controlled by Marco Tronchetti Provera and owned also by the Rovati family, Massimo Moratti, Alberto Pirelli, NB Renaissance, Unicredit and Intesa Sanpaolo.
The expansion of Camfin’s activities to private equity was introduced in the company’s statute last October, at the same time as Intesa Sanpaolo entered into the capital of Camfin with 10.7% of the voting rights, against a stake of 7 , 5% of the share capital (see here a previous article by BeBeez). Pirelli is Camfio’s main asset, but now both the equity investment in Pirelli and all other equity investments, interests and financial instruments are managed “with a view to a subsequent disposal in the context of typically private activities equity. ”
The partnership should relate, on one hand, to Longmarch’s long position on Pirelli for 5.19% of the share capital and, on the other hand, the call options on a further 4.89% of the share capital, subscribed by Camfin in September 2019, with expiry September 2022. On the first front, Tuesday 31 March from Consob communications, it emerged that Niu, with which Pirelli has been holding industrial relations since 2005, at the time of the start of the group’s first factory in China, reached a “potential participation” of 5.19% in Pirelli through Longmarch. As for the call options on the 4.89% of Pirelli, subscribed by Camfin, they could be settled in cash with consequent cash contribution within the eventual partnership with Longmarch.
The partnership with Longmarch in any case would not affect the one already existing between Camfin and ChemChina, which controls Pielli at 45.52%. Both have resolved in recent days to purchase another 1.5% stake in Pirelli.