“Bahrain based asset manager Investcorp has entered in exclusive talks to buy Italian Series A club AC Milan for $1.1 billion“, the Bahrain Embassy in the United Kingdom wrote yesterday on its Twitter profile, recalling that Investcorp, which was founded in 1982, today manage over $42 billion in assets across the globe.
The tweet therefore confirmed the rumors that had spread around Easter both about an imminent divestment by Elliott Management, controlling shareholder since 2018 (see a previous article by BeBeez) and about the evaluation of the red-black soccer team, with the financial accounts clearly improving after the care of the American fund.
The six months of the 2021-2022 financial year ended in fact at the end of December 2021 with a net profit of 3 million euros, which is a real miracle, after the series of heavy losses recorded in the previous years (see here Calcioefinanza). This is a result which, on the one hand, derives from an increase in revenues of 40% compared to the same period of 2020 and which, however, is largely attributable to the approximately 20 million euros raised thanks to the sale of the property in Via Aldo Rossi 8, in Milan, in the Portello area, headquarter of the football team. The acquired is the Inarcassa RE Compartment Uno fund, managed by Fabrica sgr (see here a previous article by BeBeez). The seller was Casa Milan srl, a company 99% owned by Milan Entertainment (which in turn is 100% controlled by AC Milan spa) and 1% by the parent company AC Milan spa. However, the increase in revenues should continue during the year, thanks to UEFA’s revenues for the return to the Champions League and the proceeds from the stadium, so much that we are talking about as much as 300 millions in projected revenues at the end of the financial year as at 30 June 2022.
We recall that the 2019-2020 financial year, sunk by Covid-19, ended with the most serious loss in the history of Milan, 195 million euros (compared to only 168.6 million in revenues), after 145, 9 million in the 2018-2019 season, 126 millions in 2017-2018 and 73 milliosn in 2016-2017. It is no coincidence that KPMG in its May 2021 report on The European Elite 2021 about soccer teams valuations in EU had calculated a decline in the enterprise value of Milan by 19% to 427 million euros at the end of 2020 from 2019 and 22% compared to 2016, the most pronounced decline suffered in the 5 years by the 32 teams under observation (see here a previous article by BeBeez).
But in the face of monstrous losses, the US fund has always made available the necessary capital to guarantee the keeping of the accounts. In AC Milan’s 2020-2021 financial statements at 30 June 2021, we read that the group recorded a consolidated loss reduced to 96.4 million euros, after revenues of 260.9 millions, a positive net equity of 67.3 millions and a negative consolidated net financial position at 30 June 2021 of 101.6 millions. And Financial statements continue: “The majority shareholder Rossoneri Sport Investment Luxembourg sarl (an investement vehicle controlled by Elliott, editor’s nots) has guaranteed the commitment to financially support the companies of the Milan group for a period of not less than 12 months from the date of approval of the these consolidated financial statements. During the 2020/2021 financial year, Rossoneri Sport Investment Luxembourg sarl made capital injections in favor of the parent company for a total of € 129.5 million“. This figure is in addition to those already disbursed by the fund from July 2018 to the end of September 2020 in subsequent recapitalisations for a total of approximately 650-700 millions (see here a previous article by BeBeez), including the 303 million euros of bonds and loans maturing in October 2018 and which were converted into equity. Fiscal year 202-2021 was the last recapitalization made by Elliott: “In the last year we have not invested in equity in the club’s coffers and we shouldn’t do it even in the short term: the boat has stabilized and is focused on commercial growth as well as performance on the pitch “, said Giorgio Furlani, Portfolio Manager of the Elliott fund and director of AC Milan, who spoke at the recent FT Football Summit 2022 organized by the Financial Times at the beginning of last March (see Milan News here) .
Elliott had become the owner of the red-black team when the previous Chinese owner, Yonghong Li, had not repaid in time the US fund that the previous month had anticipated the last tranche of 32 million euros of capital increase that the Chinese financier has he was committed to subscribe. Elliott, therefore, had then enforced the pledge on the Luxembourgish Rossoneri Sport Investment Luxembourg sarl, parent of AC Milan, and had become the new owner of the team (see here a previous article by BeBeez), without having to wait until October 2018, when, as mentioned, the football team’s debt of 303 million euros was to expire. Even in that case, if the debt had not been repaid, Elliott could have enforced the pledge on AC Milan’s shares and become the owner (see here a previous article by BeBeez).
As for Investcorp, the fund has been particularly active in Italy in recent months. We recall, in fact, that recently on the one hand it won the auction for the control of HWG srl, a Veronese company specialized in cyber security (see here a previous article by BeBeez) and on the other it announced the sale for 630 million euros of the iconic Dainese technical / sports clothing brand to Carlyle (see here a previous article by BeBeez). Investcorp’s Italian private equity portfolio also includes Cloudcare (digital sales and marketing solutions), Corneliani, a luxury men’s fashion brand into which Investcorp has injected financial resources several times but which has actually been in the portfolio since 2016 (see here a previous article by BeBeez), and Vivaticket (global provider of integrated ticketing software solutions, released in 2019).
Investorp is also active in Italy on the real estate front. In recent weeks, for example, it has purchased a building in Rome for office use located in Via Paolo di Dono 44 in an area adjacent to the EUR district, for 128 million euros. The Cristoforo fund, launched by Prelios sgr in 2019 and whose shares are indirectly held by Goldman Sachs, sold the asset (see here a previous article by BeBeez). This was the second real estate investment in Italy for Investcorp, which in fact entered the Italian real estate market in October 2021, with the acquisition for 74 million euros of the Milan office of Kering, the French luxury multinational owner of the Gucci brands, Yves Saint Laurent and Bottega Veneta. On that occasion, the Milano Core I fund, managed by Castello sgr and subscribed by Investcorp, acquired the building in via Mecenate 91 in Milan, which currently houses the Kering offices, from the Bel Real Estate Group (see here a previous article by BeBeez).
Investcorp’s real estate interests lead the fund to be a privileged countertpart for AC Milan also on the issue of the new stadium in Milan. In fact, we recall that last December AC Milan and FC Internazionale Milano announced that the concept presented by the Populous international architecture studio, known as “La Cattedrale”, was the project chosen by the two football clubs for the new stadium in Milan (see here a previous article by BeBeez). However, nothing has yet been really decided and in fact the hypothesis that the old San Siro will be renovated and managed only by Inter is still open, while AC Milan could build its own stadium in another area close to Milan.