Exor, the Agnelli family's Dutch holding company, sold about $3bn of Ferrari shares in February to fund buybacks and new investments.
Krishna Mohanraj argues a holding company will always carry a discount, so buying back stock at a 50 to 60% NAV discount was sensible and investors should not hope it narrows.
Exor's long-term focus sectors are healthcare, luxury and technology, with Mohanraj predicting it could become a legitimate health tech player within five years via its roughly 20% Philips stake.
Exor Turned Fiat's Crisis Into a Ferrari-Led Holding Company
Exor is the Agnelli family's holding company, rebuilt from a Fiat-centered car group into a portfolio led by Ferrari and pointed at healthcare, luxury and technology. Its results depend on choosing strong operators and then acting as a critical friend. The holdco discount of 50 to 60% is structural, so the case rests on NAV growth rather than a narrowing gap.
Takeaways
Ferrari drives value in a listed-heavy portfolio. About 70% of gross asset value, roughly 45bn euros, sits in listed companies, mainly Ferrari, Stellantis, CNH Industrial and Philips. Ferrari is the main driver of NAV per share growth. Private holdings include Louboutin, The Economist and Welltec.
The holding company discount is structural. Exor trades 50 to 60% below NAV. Mohanraj says holdcos always carry a discount and investors should not hope it narrows, since management cannot control it. Buybacks at that discount made sense, funded by a roughly $3bn Ferrari sale in February.
Picking Marchionne saved Fiat. Fiat went through four CEOs in three years and looked as if it might not survive. Marchionne, found on the fourth or fifth attempt, got about $2bn from General Motors to cancel a put option and turned the car business around.
Exor backs leaders and acts as critical friend. The stated approach balances entrepreneurial spirit with financial discipline, with debt held at 10 to 20% of assets, mostly long-dated bonds. Once a good leader is found, Exor stays a critical friend, as with Benedetto Vigna at Ferrari and Scott Wine at CNH Industrial.
PartnerRe returned roughly a 9 to 10% IRR. Exor bought the reinsurer in 2015 for about 9bn and sold it to Covéa after five or six years. Mohanraj says reinsurance means taking volatility from others, and markets dislike volatility, which leaves public reinsurers in a tough structural spot.
Healthcare is the most promising next focus. Exor's long-term sectors are healthcare, luxury and technology. It holds a stake near 20% in Philips, now a pure health tech company, plus Institut Mérieux and bioMérieux. Mohanraj predicts Exor could be a legitimate health tech player within five years.
How the Agnelli family passed the baton
Giovanni Agnelli founded Fiat at the end of the 19th century, and the family bought Juventus in 1923. Fiat became Italy's industrial engine and held 80% of the Italian auto market.
His grandson Gianni Agnelli led Fiat for almost 40 years, turned it into a global company and formed the partnership with Ferrari.
Gianni's grandson John Elkann was named heir in 1997 at age 21. He became sole family representative at 27, while Fiat was in crisis.
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On this episode 2
Show 1
In 2009 Exor was set up to simplify a tangle of holding companies including IFI and IFIL. Its legal headquarters later moved to the Netherlands.