Chapeau's interview with Giovanni Tamburi: The Roman who bought the largest Italian companies

Today TIP's assets are over 3 billion. Great gurus of the time who said it was illegal to do these things. I don't care, I'm convinced there's a terrible bubble. How much money do you want? Three and a half million. Boom, I sent the wire transfer and our, I believe, 14.5 million became, to say the least, 300.

I played with toy cars and that was enough for me. In the early years of life I wasn't doing very well, so every injection came with a model car gift, and in the end I had a nice collection.

Exactly.

My mother didn't do anything, in the sense that she was a mother of four children, which was already quite a job. My father worked at the FAO.

At 11, instead of going to the countryside or playing tennis, I sold cigarettes from the tobacco shop. Then later with some friends and my brother, I set up a small advertising agency. I was 17 and it was already billing. We were quick to catch the trend of those paper cubes printed on the sides, something that didn't exist in Italy. We had seen it at a trade fair abroad, so we helped sell these cubes to companies that printed their logos on the sides. Then with another brother of mine, I enjoyed buying, selling, and fixing mopeds. I started working already during university at this consulting firm, where I was sort of assistant to the founder. During that period I dealt a lot with tourism, for example. He was one of the consultants for Valtur — at the time Valtur was the top of Italian tourism — so going around Italian villages and studying a strategy for how to evolve Italian tourist villages was one of those very interesting schools. And one of the clients was a large construction company that asked me to come work for them permanently. A friend of my father who had a large construction company, Cogefar, found out and told me, 'You can't work for the competition, come to me.' From September 1st, 1977, in Milan, which was something I had no desire to do because I was perfectly happy in Rome, but these are people you can't say no to. And it was one of my great fortunes because from there, the consulting was managed by a gentleman who later became director general of Bastogi, a major financial group of the time, so I ended up working more for Bastogi than for Cogefar, which was the beginning of this work in investment banking, merchant banking, and everything went well for me.

By chance, in the sense that I knew indirectly one of the founders of Euromobiliare who one day turned to me asking if I knew anyone good in M&A at Bastogi. I said, 'Look, there's no one.' After a few months they called me back and said, 'Why don't you come? We'll pay for courses if you want, in Italy or abroad, on M&A because we need to build this sector.' And I started as a young M&A assistant at Euromobiliare.

26. It was the great school of my life because with Guido Roberto Vitale and Alberto Milla we got into real merchant banking, whereas at Bastogi we were selling one company a month to pay salaries. There was intermediation, wealth management, a foot in the insurance business. M&A on mid-sized companies in Italy — we invented it in those years, in the '80s at Euromobiliare. Young M&A assistant, then I became general manager in 10 years, and then in the end I decided to leave because the company was bought by Midland Bank, which in turn had been bought by Hong Kong and Shanghai Banking Corporation, and I had no desire to be a functionary of an Anglo-Chinese bank. I took a sabbatical year, a year writing books, teaching at the university, because I had always been somewhat opposed to the New York, London, Milan style of finance — closed, reserved, you can't say anything, you can't do anything. You do your job well if you share it, not if you keep it to yourself and don't even tell your wife when you get home.

After a few months I was proposed to join this privatization commission at the Treasury Ministry because in my last year at Euromobiliare I had been sent to England to Midland Bank, which also had a privatization division during the Thatcher period, so I studied extensively what Thatcher was doing. And one day I get a call from Professor Cappugi who had been tasked by the minister to set up the privatization commission, but nobody knew what these things were, and he remembered that at a dinner I had talked about this. He told me, 'Listen, come here because nobody knows what we're talking about, but the state debt is so monstrous that we need to try to save it by selling some jewels. Can you give us a hand?' I was happy to, because what could be better than a sabbatical period helping the Italian state. Most people were saying it's unconstitutional to privatize ENI because there's oil, it's unconstitutional to privatize Enel because there are the bills — oh my, giving families' electricity to private hands, are we crazy? I must say that with a certain stubbornness, I convinced almost everyone, we wrote the law, and the law started the privatizations of pieces of Eni and Enel.

There would be quite a few anecdotes, especially about all the great gurus of the time who said it was unconstitutional, illegal to do these things. I believe the bold bet was saying 'I don't care about all these self-righteous people who think they're the only ones who know. Let's try to do good for the country and not for lawyers, notaries, bureaucrats.' The best anecdote was when Professor Cappugi realized there was all this resistance, he called Matelda Grassi, a lawyer, and myself, and said: 'Let's forget about everyone else, the three of us get a room, write the draft of the law, bring it to Giuliano Amato and see if he backs it.' He backed it, and essentially the commission was shown a finished piece of work, against most of them.

The first mentor was Valerio Levi with consulting during university in Rome. The second mentor was Nanni Fabris, director general of Cogefar Bastogi, during those 3 years I was there. The third mentor was Guido Roberto Vitale, with whom I spent 10 years at Euromobiliare, already recognized as one of the great gurus of Italian finance.

One thing that really stayed with me from Nanni Fabris was the idea of simplification. In a period when at university they were teaching financial statement analysis with 100,000 ratios, 27 ratios and so on, he maintained that to understand truly important things, three or four items were enough, and this was one of the most important lessons of my life. From Guido Roberto Vitale's perspective, I believe combining work ethic with a passion for intelligent corporate finance — because pure finance, I believe, is interesting only up to a point. We were never the ones for derivatives, structured products, complicated deals.

I finished the sabbatical year. I had many clients knocking on the door saying 'Why don't you set up some M&A activity again?' Gardini, Carlo De Benedetti, Giulio Malgara — I founded Tamburi Associati Finanza e Privatizzazioni srl. Alone, without even a secretary, I started giving some of these consultancies to some of the clients I had before who weren't happy with the Midlandized Euromobiliare. This reputation I had built somewhat on privatizations meant that the mayor of Rome called me to do privatizations in Rome, the mayor of Milan to do them in Milan, the mayor of Como to do them in Como — a green council on one side, a red council on the other.

I always went to the companies, I never tried to wait in Milan, in a place like this, for the client, and this was always quite appreciated. So my life was on the road. I drove 50-60,000 km a year in the car, going to companies, trying to listen to entrepreneurs, trying to understand what they might want in terms of strategy, generational transitions, capital alternatives. The business developed quite well right away, so after a short time Alessandra Gritti came to work with us too, who later also became my wife, and the current general manager of TIP, Claudio Berretti, was my student at Castellanza. He took his exam with me, I found him sharp, I said 'Why don't we do the thesis?' He did the thesis, and before even defending it he was already here working.

It was the era when private equity funds were being born in Italy. I realized there could be a different role. First, not being a fund that by definition must buy, must sell. Second, replacing by putting in its own administrator tied to the company, but being its financial director with the perspective of controlling as if you didn't trust the entrepreneur. We devised with Alessandra and Claudio Berretti this minority model for development, geared toward the long term. Whoever wants to sell should go to funds. Whoever wants to accelerate growth through M&A, investments, and so on, could have us not as a simple consultant but as someone participating in the capital, risking with him, and even leaving him the trust of management while putting in money. Obviously, not wanting to launch a fund because I didn't want to do something that would imply reselling the company, and besides, the project was launched not wanting any banks but only families. We were about fifty families, we then listed the company on the stock exchange after 4 years, and at that point the families doubled, becoming about 100.

Well, we started as five, me and four others. The four were clients from the M&A side who had understood that this formula could work. Between me, Alessandra, and the four of them, through word of mouth it became 50 because it was a new project. We were in 2000, so there was also the dot-com bubble which helped because everyone was saying 'Mom, we want to invest in these innovative, modern things.' In fact, the initial focus was more on investing in that world than in more traditional companies.

We suffered a few small losses and so on. Nothing transcendental. At that moment venture capital is a bit like the law of statistics, right? You invest in 10 companies, as long as one does well, the other nine you don't care about. That never fascinated us. We looked at companies one by one, trying to extract value from each one. The big leap, the first important investment, was Interpump 24 years ago. We created the first club deal to do this very large operation. What I had in mind was trying to remove from companies this excess of financial leverage, this mentality of 'take the money and run' that many private equity funds had. Interpump was owned by a private equity fund at the time because the founder had decided to sell the entire capital to this fund. The fund had then listed the company on the stock exchange and was left with a small piece. The ambition was to say, if we take this small piece, maybe invest some other money, take a truly long-term perspective, we can create with Interpump an international model of great success, removing that desire that frustrated the founder entrepreneur a lot — 'the better things go, the faster you have to sell on the stock exchange or in other ways.' And this worked. The Club Deal was created because there wasn't enough money, so having all these families behind me and not having the money, I made some phone calls, I said: 'Gentlemen, can you help me?' And there too, with six or seven families, not even many at the time, we immediately filled the gap that was needed. We grew four times in Interpump over the years, buying shares from families who sold when they thought they had earned enough. But by holding firm, we earned more than everyone else, except the founder who is still there. Just to give a number, we were buying Interpump shares at about €3. In these 24 years, dividends were distributed for much more than €3, and today the stock is worth 45, it even reached 60.

But things are simple, much more than people believe. Mega due diligence serves up to a point, mega contracts serve up to a point. We trust the entrepreneur.

One day we create a contact with the CEO Franco Moscetti. The Holland family already had very strong control over the company. There are two ladies, a mother and a daughter, so we go to the palace to propose entering the capital. They look at us at first with some suspicion because in reality, even though they were already listed on the stock exchange, they preferred to go their own way directly without partners who might condition the family's life, and that was that. Then later we thought it might be useful to tell the CEO, 'Look, if one day you have a large acquisition, rather than going directly to the market to propose capital increases, we could guarantee you part of this capital increase so that you go to negotiate the acquisition with the money in your pocket.' And I wrote him a letter saying up to 100 million euros, if you want we're ready here, you just need to convince us with a good deal. After a few months he came back with a good acquisition in Australia. We had a new meeting with the Holland ladies. They liked the idea, also because they liked the fact that we wanted to, so to speak, bet a lot of money on a new operation. And Franco Moscetti, who by the way we later made chairman of OVS because the world is small, negotiated, brought the deal home, then the deal was proposed to the market in a capital increase open to everyone. In the end we put in less than the 100 million promised, and from that moment the desire to accelerate this growth was born, so a whole series of other acquisitions around the world, of store networks, because being a large retailer, like OVS, you buy companies but they have stores inside. Moscetti left, Enrico Vita arrived, the current CEO, and currently Amplifon has almost 11,000 stores in every corner of the world, so it has become the absolute leader in hearing aid retail.

In this room the relationship with Remo Ruffini, the great guru of Moncler, was born. Remo's accountant, whom we knew very well, both Alessandra and I, reached out. He had already gone ahead with Euraseo and Carlyle, but the accountant in particular said I would like him to have a partner in the family, in the company, upstairs, someone who gives him advice not about the company to list, to develop, and so on. We liked each other, after 15 days 140 million went in. Besides, in his personal holding company, not even in Moncler which wasn't even listed yet, saying then one day if it lists on the stock exchange we'll get the listed shares, but anyway we're making a bet of trust on you. A meeting that was supposed to be an hour lasted four and a half hours, two phone calls in the following days and handshakes.

I had him explain what he had in mind. He said: 'I have about eighty stores, generally small and in ski resorts. I want to enlarge the stores in ski resorts. I want to open stores in cities like Milan, New York, just doing these operations. If I give the right product at the right price we can grow. Today I have a high margin that seemed excessive for that moment. I can also lose margin and the combined effect of these two operations can bring me revenue growth that more than justifies in absolute terms the margin growth.' I said, 'Dear Remo, I like it very much, let's bet together and move forward.'

During the time we were in the family holding company, we believe we helped him a bit with financial management. Certainly it was useful, I believe, for Remo to have us alongside for the stock market listing. In a couple of meetings at Cova we finally set some guidelines for the right things to do. He relied on us quite a bit and we tried to say how to set up this operation well, also because everyone was saying raise the price, push everything, and so on. Instead it was one of the few occasions where we said 'No, let's be conservative, let the market make money.' Then a very strong personal relationship remained, we see Remo very often. Starting from zero and arriving at a market capitalization of almost 20 billion euros, as it was with the stock at its highs, what more could you want?