By Jessica Cheam, ST
The Government of Singapore Investment Corporation (GIC) is investing 1 billion euros (S$2.14 billion) in an Italian firm run by the famous Benetton fashion family.
The GIC’s private equity unit, GIC Special Investments, will initially hold 3 per cent of Sintonia, with the stake increasing to 14.3 per cent after a financial restructuring.
This will comprise an initial investment of 150 million euros, which will rise to 1 billion euros in total after a capital increase by Sintonia, GIC spokesman Jennifer Lewis told The Straits Times.
Luxembourg-based Sintonia is the Benetton family’s privately run vehicle for infrastructure investments and does not hold shares in the United Colors of Benetton fashion brand.
But it does run highway manager Atlantia, which manages the most extensive highway network in Europe, and has a stake in Telco, the holding company that controls Telecom Italia, Italy’s largest phone group.
The story of the investment first surfaced in Italian daily La Stampa, which said yesterday that a deal was slated to be signed in Luxembourg.
According to Reuters, the deal is expected to be closed in the second quarter of this year.
The family’s empire is controlled by Mr Luciano Benetton and his three siblings. It is best known for the global fashion brand and the sometimes controversial advertising it employs.
Forbes magazine ranked Mr Benetton 323rd in its list of the world’s billionaires last year, estimating his fortune at US$2.8 billion (S$3.9 billion).
The family also owns the retail group Edizione Holding, which controls the Milan-listed Benetton Group, and Sintonia. Together, they have a combined revenue of 9 billion euros.
GS Infrastructure Partners, a Goldman Sachs fund, will also hold a 14.3 per cent stake in the restructured Sintonia.
News of the deal came a day after a private British firm, Orchard Street Investment Management, said it had teamed up with the GIC to create a £300 million (S$840 million) fund to invest in British commercial real estate.
In recent months, the GIC has pumped billions into troubled financial giants in the wake of the US subprime crisis, investing $9.82 billion in Citigroup in January and $14 billion in UBS in December.
Singapore’s other sovereign wealth fund, Temasek Holdings, also bought a stake in a US investment bank, pumping $6.4 billion into Merrill Lynch.
GIC Special Investments has bought stakes in infrastructure-related firms before. In 2002, it teamed up with Keppel Corp’s venture fund unit k1 ventures to buy a stake in US-based Prime Co Wireless for US$14.2 million.
And in 2000, it paid $15 million for a 16 per cent stake in Australian-listed EasyCall International, an internet network infrastructure services company.
The GIC, which manages Singapore’s foreign reserves, manages a portfolio worth over $100 billion, but its exact size is unknown.
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