NEW YORK – All it took was a Bloomberg agency for the world of finance in New York to become agitated to evaluate the credibility of a piece of news that in itself seemed unlikely: it was possible that Paul Singer, with a legal background, founder of Elliott, one of the largest funds American hedge companies, 50 billion under management, had lied to the Italian authorities and perhaps also to the European authorities that supervise football, by organizing a fictitious sale of AC Milan to Gerry Cardinale’s Redbird Capital Partners? The intuitive answer is no: Funds are now part of the establishment. They do not slip on matters of form, they are assisted by excellent lawyers and, above all, they cannot betray the trust of the investors who finance them by choosing ambiguous paths.
The sale of Milan and doubts about its value: the truth in the cards with 41 key words
by Rosario Di Raimondo
“Something doesn’t add up,” observes a respected financier in New York during a conversation at Kappo Masa, on Madison Avenue, under the Gagosian Gallery, one of the most exclusive Japanese restaurants. “If the authorities do not demonstrate that they have the smoking gun, Italy’s credibility in attracting foreign investments will be at stake – another intervenes – the invasion of the Guardia di Finanza to seize documents in a company that remains private does not give a lot of security.” And yet another: “First the threat to tax excesses in bank profits, as if those profits did not support pension funds and therefore citizens, then unheard-of changes to the benefit of minority shareholders. Then the difficulties of KKR with its investment in communication and finally today this attack on two funds that enjoy prestige”.
The substance of the reactions, all anonymous but very well informed, is that too many Italian events still present margins of risk and opacity in terms of rules, intrusions by the authorities, which risk making the investment too dangerous from many points of view, including business and reputational.
A perverse contradiction is thus generated: on the one hand our government does everything to promote direct international investments of private international capital in Italy (recently a lot in football) on the other there is a systemic context that discourages investors with reactions that give the clear impression of a disconnect from consolidated international financial practices and that happens in our country.
It is not clear what the investigators are looking for, and it is possible that we have confidential documentation that proves the suspicions – by disguising the ownership Elliot and Redbird have given false or misleading information to the FIGC which could also be in violation of those UEFA rules which prevent a controlling entity to have influence over multiple teams.
From what we understand from information leaked through press sources, the suspicions have to do with the structuring of the sale of Milan to Redbird. There is a loan of approximately 560 million euros granted by the seller to the buyer out of a total cost of one billion and 200 million euros. This loan, together with various management positions remaining unchanged and a price considered inappropriate by investigators, suggest that the failure to communicate many details occurred in order to evade the rules and be able to continue to exercise de facto control over the company.
But doubts about the congruity of the values disappear when the market is free to decide on a common price, an agreement that does not concern third parties. Furthermore, in this case there already existed at the time of the sale an alternative offer from an international private equity fund capable of carrying out the operation at the same price.
Taking out a loan at the time of acquisition for a private equity firm is not only normal, but recommended to increase leverage on the investment and obtain higher returns at the time of sale. The offer of the fund, again foreign, but not American, was then declined because Redbird and Elliott had reached an agreement on a vendor’s loan which allowed Cardinale, still looking for investors to repay the debt, to buy at the same price. In the management the CEO was changed but the fact that Giorgio Furlani had worked with Elliott for over a decade once again fuels suspicions of dependence on Elliott.
“It seems to me to be a semantic and subjective question – concludes another diner in front of a very expensive plate of sushi – to suspect that a property persists means confusing the role of debt with respect to capital. And if Elliott has already said publicly that he has sold, I doubt that he is lying and exposing himself to much more serious trouble.”
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– 2024-03-16 18:23:55
