Billionaire Del Vecchio Backs Generali Challenge, Eyes Big Deal

(Bloomberg) -- Italian tycoon Leonardo Del Vecchio is backing a push for a change in leadership at Assicurazioni Generali SpA, saying that a proposed slate of new managers put forward by investor Francesco Gaetano Caltagirone could free the way for a major deal involving Italy’s largest insurer.

Construction magnate Caltagirone’s strategy for Generali offers “a long-term entrepreneurial vision that doesn’t just look for dividends but also at the need to grow the company,” Del Vecchio, 86, told Bloomberg News. Del Vecchio, the founder of eyewear giant Luxottica, is the insurer’s third-largest investor after investment bank Mediobanca SpA and Caltagirone.

Del Vecchio is considering further boosting his stake in Generali from its current 8% level, according to people familiar with the matter, who asked not to be named as the deliberations are private. 

He is also now set to back Caltagirone’s list at the insurer’s April 29 annual general meeting, in a vote that’s shaping up as a potential showdown that could reshape Italy’s financial industry. The vote comes after years of skirmishing between Mediobanca and the two tycoons, who claim the investment bank’s influence over Generali has led it to underperform and miss out on growth opportunities. 

Caltagirone, who owns more than 9% of Generali, is spearheading a challenge to oust Chief Executive Officer Philippe Donnet, instead proposing company veteran Luciano Cirina as the insurer’s next CEO, with ex-Goldman Sachs banker Claudio Costamagna as chairman. 

Del Vecchio said he also supports Cirina, who was fired from the insurer earlier this week after being placed at the head of the Caltagirone list. “What I like more than anything is to see a manager from inside the company, with a long and successful career at Generali, being proposed as CEO,” he said. Cirina was the head of the company’s business in eastern Europe.

In Costamagna, Generali would get “a chairman with operating capabilities who has what it takes to create value for the company and give meaningful support when it comes to the management of major, transformational transactions that we hope to see in Generali’s future,” Del Vecchio said. 

Diversifying Holdings

Caltagirone has said the insurer can boost income by half with his strategy, which includes cutting costs and boosting M&A activities. Caltagirone’s plan marks a contrast with the Donnet strategy, presented in December, which hinges on expansion in asset management and high-margin insurance. 

Del Vecchio, who has a net worth of about $30 billion according to the Bloomberg Billionaires Index, has in recent years been seeking to diversify into finance, which typically delivers higher returns than the eyewear industry. He is also the biggest investor in Mediobanca, where he’s criticized CEO Alberto Nagel for being too conservative and overly dependent on the investment bank’s stake in Generali.

The Caltagirone strategy “gives the idea of a strong company, with a great future but which has perhaps been held back by a shareholder only interested in extracting dividends,” Del Vecchio said.

The Luxottica founder has also questioned Mediobanca’s September decision to tighten its grip on the insurer through a stock-lending mechanism. In the run-up to the April vote the investment bank has raised its holding in Generali to about 17%, partly through rented shares.

“I’m from the old school that thinks entrepreneurs should invest with their own resources,” Del Vecchio said. “I recently discovered that shares in companies can also be rented just in time to vote at a shareholders meeting to then return them to their owners. If this practice became commonplace and legitimate I think it could have serious consequences for our economy.”

Del Vecchio on Generali:

• On CEO candidate Luciano Cirina: “Cirina has a perfect understanding of how Generali works and has deep roots in Trieste, where he was born and which is the beating heart of insurance in this country. The most important thing is that his candidacy sends a message to all of Generali’s people that every one of them, if they have the competency and the capabilities, can reach the very top.”
• On Caltagirone’s proposed slate of board candidates: “It’s a list that seems to be highly competent and well balanced.”
• On market reaction to the challenge: “The market has already responded favorably to Caltagirone’s plan. The share price is going up and Generali is confirming itself as a good financial investment.”

©2022 Bloomberg L.P.