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Turbo-charged auto parts

In four years, the Alpha private equity fund allowed it to grow. And now the Milan-based Rhiag company is ready to make its debut on the Stock Exchange. To expand its business into the rich BRIC countries

Turbo-charged auto parts

This is Italy Team

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It has just applied to be admitted to the Star segment of the Stock Exchange and it is counting on realizing greater economies of scale, acquiring new life blood and increasing its visibility. The Alpha private equity fund has decided to go public with Rhiag, a company active in b2b distribution of spare parts for autos and commercial vehicles in the independent aftermarket. The company, active in Italy, Switzerland and Eastern Europe, has a well-developed network: 10 centralized warehouses and 159 peripheral distribution centers serving over 60,000 customers. A business which, in terms of volume, translates into a total of over one million cubic meters of goods warehousing, with nearly 50 million parts shipped each year.

"For us, being quoted is the best route for providing the company with what it needs to continue its growth and consolidation process in the sector over the long term," Luca Zacchetti recently explained to Panorama Economy. Zacchetti is CEO of the group and former managing director of the Avio aerospace company, also scheduled to be listed in 2012. The group, which is headquartered in Milan and was acquired in July 2007 by the Alpha fund (run in Italy by Edoardo Lanzavecchia), has grown from a turnover of 420 million euros to a pro forma of over 600 million with a gross operating margin that has risen from 40 to 72 million euros, while employing 2,500 people. The company has always been committed to penetrating new markets and the increase in revenues is tied to its recent 100% acquisition of the Czech firm, Auto Kelly, which made the Rhiag group the leader in the Czech Republic and Slovakian markets, with 95 million revenues, a network of 60 outlets and 150 service stations.

All helps to boost appeal in view of the end-May quotation, the modality of which will be an IPO (Initial Public Offer). Two-thirds of the capital will go on the market, while current shareholders will dilute their holdings to create the float: Alpha from its current 72.1%, Alpinvest from its 23.9% and Josef Koller from 4.1%. In addition to the shares, a tranche has also been planned to increase capital for growth and to partially repay bank debt. The IPO financial advisors are Mediobanca, Intesa Sanpaolo and Goldman Sachs, and the legal advisor is the Clifford Chance legal studio.

 

Rhiag, explains Zacchetti, "is a healthy company operating in an anti-cyclical business that could be attractive to the public. In addition, it has a history of profitable acquisitions and is a valid candidate to consolidate this segment of the market on a European level. We intend proceeding from the standpoint of acquisitions and having greater financial accessibility."

The group's strategy is, in short, to continue growing in the future, both internally and through acquisitions in countries where it already has a presence, as well as in new geographical areas that are predictable but very rich, such as the BRIC countries?"Brazil, Russia, India and China. Currently, approximately 50% of its revenues are from Italy, while the other half is divided between Switzerland, Hungary, Romania, the Czech Republic, the Ukraine and Slovakia. Of Rhiag's five central warehouses, two are in Siziano (province of Pavia) and supply all of Italy, while the other three, in Prague, supply both offices in the Czech Republic and Slovakia, as well as those in Hungary, the Ukraine and Romania. The group also has five national warehouses, in Budapest, Kiev, Bucharest, Baar and Rosé.

One of its strong points is speed. The company, in fact, "is able to determine in real time the availability within its warehouse facilities of an ordered product and deliver 90% of auto components within four hours, with peak response times of two-and-a-half hours in Italy thanks to online ordering. And if the product is not available immediately in the branch office where it was requested, we are still able to deliver it within 24 hours," Zacchetti concludes.

Francesca Vercesi

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