It’s not often that a simple restructuring can successfully transform a business, but that is exactly what has happened to Intesa Sanpaolo’s consumer and luxury investment and relationship banking division.
Three years ago, Italy’s strongest bank decided to restructure its business along industry lines. The idea was to create specialist divisions with broad and deep knowledge that would allow it to compete with the big global banks.
The plan has clearly worked, particularly for consumer and luxury investment and relationship banking. Since the reorganisation, Intesa has moved from the position of a tier 3 or 4 bank to a point where it is integral to some of the world’s biggest and most important consumer deals – even taking roles normally only held by institutional investors and insurers.
It has done this by giving an impressive service to its existing customers, seizing opportunities, putting in the groundwork and preparation, and showing great skill and commitment – all thanks to in-depth market knowledge and experience.
“It’s about relationship banking,” says Marco Perelli-Rocco, head of consumer and luxury investment and relationship banking at Intesa Sanpaolo.
“We make sure that the client is impressed. We listen to the market, we really think about how we might help and then we make a proposal. When we offer something we know we will be able to deliver it.”
Marco Perelli-Rocco, head of consumer, retail and luxury industry at Intesa Sanpaolo.
Most recently this strategy landed Perelli-Rocco and his team the role of arranger and lender in Coty’s $9bn acquisition of Procter & Gamble’s beauty business in October 2016.
An Intesa client – Mondelez, the consumer group spun out of Kraft – had a joint venture with Coty’s owners, JAB Holdings, a private wealth fund and holding company. Mondelez had been impressed by Intesa’s skill and commitment in helping to finance that joint venture and had recommended the bank to Coty when it was looking to buy the P&G business.
“We had already targeted Coty as a prospect as we had some beauty clients including L’Oréal. Several times we’d tried to meet to introduce ourselves but had never managed it,” Perelli-Rocco says.
In early July 2015, he received an invitation to a meeting at the end of that month. In the intervening weeks, P&G announced that it was selling its beauty business to Coty and Perelli-Rocco realised he had been invited to discuss finance.
“We really had not expected to be involved in the financing of a $9bn beauty deal, but we were,” he laughs.
Intesa was invited to be arranger and lender, and made an offer of a $100m Term Loan B, a seven-year debt that pays interest but doesn’t amortize (get paid down). These can be difficult for banks to undertake because the debt affects their capital ratios, and is usually held only by institutional investors and insurers.
“We thought the different levels of financing would be scaled down so we went in big. In the end we came in at €40m in Term Loan B and our total final exposure was $320m,” he explains.
Timing could not have been better. Closure came in October this year in the same week that Intesa signed its commitment to InBev’s $75bn deal to buy SAB Miller.
Next year, Perelli-Rocco expects Coty will consider issuing bonds, should market conditions be right, and he hopes Intesa will be able to pick up some trade finance, too. Meanwhile, he has been cultivating JAB Holdings.
Over some 30 months, Intesa’s consumer investment and relationship banking team has gone from providing tier 3 or 4 support finance to playing an integral role in some of the most high-profile deals of recent years.
From this work, the bank has been able to cross-sell, further raising its profile on the world stage.
As a result, Perelli-Rocco’s budget has been increased every year despite the declining market, and the future looks rosy.
“I put this down to our structure,” he stresses. “By talking about consumer business every day, 12 hours a day, we pick up a lot of knowledge that those that aren’t sector specific will miss. They just can’t talk with the same authority about what is happening with their clients and, perhaps more importantly, what is happening with their clients’ competitors.”
As far as he is concerned, it makes the difference between being instrumental to the deal or just reading about it in the newspapers.
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