Ermenegildo Zegna to debut in New York via $3.2bn spac deal

The family-owned luxury fashion brand Ermenegildo Zegna is to list in New York in a deal worth $3.2bn.

The 111-year Italian menswear brand, which is owned by the founding Zegna family, is to combine with a special purpose acquisition company (spac) called Investindustrial Acquisition. The spac is led by European private equity firm Investindustrial and chaired by former UBS chief executive Sergio Ermotti.

Following the deal, which has an enterprise value of around $3.2bn, Ermenegildo Zegna is expected to have a market value of $2.5bn.

It is also expected to raise around $880m. The bulk of that will allow the Zegna family to cash in on part of their holdings, although they will retain a controlling 62% stake.

The rest will be used to help expand Ermenegildo Zegna in China - which in 2019 accounted for 35% of group sales - and in the US, where it acquired a majority stake in luxury label Thom Browne in 2018. Further niche acquisitions are also likely.

Chief executive Gildo Zegna said: "Today’s announcement underscores the success of our strategy of continuously focusing on the group’s brand equity while also continuing to build upon our heritage, our ethos of sustainability and…unique craftsmanship.

"The Zegna family will remain at the company’s held following the transaction’s completion, and we will continue to invest in creativity, innovation, talent and technology to sustain Zegna’s leadership position in the global luxury market."

Speaking to reporters, Zegna added: "We could have remained private for another 100 years, but the timing was perfect and the world of luxury has becoming very challenging," according to Reuters.

Hit by the pandemic, Ermenegildo Zegna’s 2020 revenues declined 23% to €1bn, causing it to report a net loss of €45m compared to a profit of €38m a year previously. However, the firm expects its performance to recover to near pre-pandemic levels this year.

The deal is expected to close by the fourth quarter of 2021.

Ermenegildo Zegna was founded in 1910 as a textiles company before moving into luxury menswear. It is the latest in a growing number of companies to opt to list in New York via a spac, including British firms Cazoo, the online car retailer, and start up Babylon Health.