How Mondelez woke up and smelt the coffee

By building relationships with Kraft and then Mondelez, Intesa Sanpaolo became involved in a €7.6bn global consumer-goods deal, writes Sophy Buckley.

Sophy Buckley

26/01/2016

“I honestly don’t know how you can operate successfully today without being organised along industry lines,”

says Marco Perelli-Rocco, head of consumer and luxury investment and relationship banking at Intesa Sanpaolo, the Italian bank.

 

His comments come after an incredible run of consumer industry deals for the bank since it was reorganised three years ago.

 

“It makes relationship banking make sense” he explains.

Certainly the number, size and type of deals have snowballed since the reorganisation. One has followed another, helping to transform the bank’s position on the world stage in terms of investment banking, M&A, bonds, hedging, working capital and trade finance.

 

The story goes back to 2012, when Intesa decided to rebalance its business away from Italian companies. It redrew its business along sector lines and went on a recruitment drive to increase international experience. Perelli-Rocco came aboard with the remit of attracting more business from abroad.

 

It was a tall order. Although Intesa, which is Italy’s strongest bank in terms of capitalisation, already had a good number of foreign clients, its role was usually limited to tier 3 or 4 lending – making it a junior banker.

The goal was to become a tier 1 and 2 bank,
which would open up more opportunities for it
to cross-sell and do business in other fields
such as commercial, debt and forex.
Kraft, the US conglomerate, proved to be the key.

Kraft was a typical and long-standing client, and Intesa was one of many banks supplying it with credit facilities. That all changed in 2013 when Kraft spun out its non-US consumer business into Mondelez International.

 

It was clear that the newly-established business was in the market for banking services and Perelli-Rocco flew to Chicago with his New York-based colleague Jordan Schweon to introduce themselves.

 

“They were a bit doubtful about the idea of retaining an Italian bank among its core group,” he admits. “This is 2013 – not a good time. But in the end they were persuaded by the fact we had always been there for Kraft.” It also helped that Mondelez operated in many of the territories where Intesa also had a presence.

 

Mondelez proposed that Intesa be part of a newly-negotiated rolling credit facility (RCF) at $50m – the lowest possible amount. But Perelli-Rocco wanted more. “We had our eyes set on cross-selling opportunities and needed to have a greater role in the RCF to be taken seriously for those.”

 

He got agreement from his boss to try for $150m, which would make Intesa a tier 2 bank for Mondelez. It agreed, scaling back the role of some of its other, bigger banks.

 

The play worked. Within months, Intesa was involved in Mondelez’s bond offerings and supplier finance. Hedging took a little longer while the necessary ISDA (a legal document setting out scope and responsibilities) was worked out. The relationship was becoming broader and deeper.

 

This put Intesa in an interesting position when Mondelez switched its coffee business to a joint venture with Master Blenders, calling it Jacobs Douwe Egberts or JDE. The €7.6bn deal created the world’s second-largest coffee player after Nestlé and the world’s largest pure-play coffee company.

 

Master Blenders took the lead in the venture with a 51 per cent stake, so it led the financing.

We didn’t have a relationship with them but asked Mondelez if they would recommend us. They did and we were invited into the financing talks.
Marco Perelli-Rocco, Head of consumer and luxury investment and relationship banking at Intesa Sanpaolo.


This was the start of another fruitful union.

“We went for inclusion in the tier 2 financing with a €200m commitment” he says.

In the end the involvement of all banks was scaled back and Intesa committed to €120m. But subsequently, it also won JDE’s cash management business in Italy, supplier finance and derivatives business. But the biggest piece of cross-selling was completely unexpected – working with the cosmetics firm Coty on its $9bn purchase of Procter & Gamble’s beauty business.

 

But that’s another story.

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