Genoa bridge disaster sharpens focus on Benetton strategy shift

A world away from the brightly coloured knitwear that made the family name, what had looked an inspired move into infrastructure by Italy’s Benettons faces increased scrutiny after this month’s Genoa motorway bridge disaster.

The Benettons’ diversification, which countered declining fortunes at their eponymous fashion brand, has been richly rewarded. But the collapse of the Genoa bridge run by a unit of Benetton-controlled Atlantia - killing 43 people - has sparked a crisis for their prized asset as the government moves to revoke its concessions.

Atlantia shares were down more than 7 percent at 1333 GMT on Monday and have tumbled by about 28 percent since the disaster.

Two decades after the Benettons’ move into infrastructure, Atlantia and related businesses such as motorway restaurant group Autogrill generate far more value than the fashion brand does for the family’s investment holding company Edizione.

Edizione, with a smattering of other holdings ranging from banks to real estate, had a net asset value of almost 13 billion euros ($14.87 billion) last year, more than half of which came from its 30.3 percent stake in Atlantia.

The appetite for infrastructure remains undiminished as the Benetton siblings - whose clothing business started as a line of homespun sweaters in the mid-1960s - look to complete a joint 18 billion euro deal between Atlantia and Spain’s ACS to buy Spanish toll road operator Abertis.

Edizione filings show that infrastructure would have accounted for 67 percent of its revenues in 2017 with Abertis on board, far more than the clothing at 8 percent.

OPPORTUNIST SWOOP

The decline in Benetton’s fashion fortunes began in the late 1980s as the company founded by Luciano, Giuliana, Gilberto and the late Carlo was squeezed by the rise of fast-fashion rivals such as Inditex’s Zara.
That coincided with a wave of privatisations in Italy from the early 1990s, allowing the Benettons to grab the motorways business through a slice of what was then Autostrade and to expand it well beyond Italy’s ageing road network.

The infrastructure forays have hit a few bumps in the road, while other investments were not always profitable.

There was an antitrust investigation into whether the toll road business might favour Autogrill for restaurant concessions, a flirtation with Telecom Italia ended in losses and Atlantia had to abandon a previous attempt at an Abertis merger after the Italian government threw up a string of obstacles.

For all that, however, Atlantia sales have tripled since 2000, when the Benettons first bought into the business, fuelled by toll road acquisitions from Brazil to Poland and a later push into airports in Italy and France.

Edizione has also benefited from rubbing shoulders with influential Atlantia investors such as Singapore’s sovereign wealth fund GIC.

“This investment had a monetary pay-off, and the other pay-off is the large presence of foreign investors in Atlantia,” said Andrea Colli, a professor of business history at Italy’s Bocconi University and author of a book about Edizione.

But now the bridge disaster has brought renewed scrutiny of the family’s broader role and influence in Italy, which has a new anti-establishment government.

“You can’t find a much higher-profile scapegoat,” said Jonathan Mantle, author of a book on the family.
The leader of the ruling 5-Star Movement, Deputy Prime Minister Luigi Di Maio, last week said that his administration was the first not to have taken political donations from the Benettons and that this made it more free to move against the family’s interests.

A source familiar with the situation said that Edizione had not made any direct political donation to Italian political parties.

Edizione said in a statement on Thursday that it would do everything in its power to help the investigation into the collapse of the Genoa bridge. On Saturday, the day of state funerals for some of the victims, the Benetton family issued a separate statement expressing its “deep pain” over the disaster.
“In this day of mourning, our thoughts turn to every person who knew and loved those who died as a result of the Genoa tragedy,” the statement said.

Autostrade per l’Italia, the Atlantia unit that managed the collapsed bridge, also pledged on Saturday to rebuild it and said it would make 500 million euros available for disaster recovery.