Italian IPO to square God’s work with capitalism

Can God and the stock market coexist? In Italy, the cradle of Roman Catholicism, this seems possible. Automatic door maker FAAC, worth some 2 billion euros, may soon ascend to the Milan exchange. The Vatican’s Archdiocese of Bologna, which inherited the business in 2012 from its penitent owner, can use the proceeds to fund good deeds. Moreover, the firm’s rapid growth may convince investors their bet is solider than a parish raffle.

Under pontifical oversight, FAAC has expanded and prospered. Michelangelo Manini, single and heirless, bequeathed the diocese his 66% stake in the global maker of mechanised doors and gates, a feat reminiscent of medieval indulgences. At the time, FAAC made 285 million euros in annual revenue. The trust the local cardinal appointed to oversee FAAC bought out French minority investors in 2015 and beatified Andrea Marcellan as chief executive. He doubled sales to some 620 million euros by 2020, partly thanks to acquisitions.

At about 10% a year compound average growth since 2012, the rate of revenue expansion has more than doubled the sector’s 3% to 4% annual pace. Also, at 21% of the 461 million euro top line in 2019, FAAC’s EBITDA margin surpasses rivals like Assa Abloy (ASSAb.ST) and Dormakaba (DOKA.S). That ought to entice investors to its flock.

It would be a relatively chunky listing for the recently sold Milan exchange. Assuming FAAC generated 2020 EBITDA equal to 18% of sales, lower than its 2019 margin but in line with that of Assa Abloy, those earnings would be around 110 million euros. On a multiple of 16, the average blessing Assa Abloy and its main peers receive, FAAC would have an enterprise value of around 1.8 billion euros, according to Breakingviews calculations.

By selling its shares, the Holy See’s Bologna office, which has yet to sanctify underwriters for the deal, could rely on greater beneficence than the 5 million euros to 6 million euros a year, a portion of FAAC’s net profit, that has been devoted to charity.

Pope Francis said in his last encyclical letter that “the marketplace, by itself, cannot resolve every problem.” For FAAC’s owners and its prospective investors, squaring God’s work and capitalism appears eminently possible.

Follow @LJucca on Twitter

CONTEXT NEWS

– Italy-based automatic door maker FAAC, fully owned by the Catholic Church, is considering a listing on the Milan stock exchange, Reuters reported on April 26, citing sources.

– Owner and founder’s son Michelangelo Manini bequeathed a majority stake in FAAC to the Archdiocese of Bologna in 2012. In 2015, FAAC bought out a 34% stake held by French peer Somfy.

– FAAC reported revenue of 461 million euros and EBITDA of 98 million euros in 2019, according to Reuters and company data. Its consolidated revenue rose to over 620 million euros following the acquisition of Tel Aviv-based TIBA in December 2020.

– The Italian group is run by a trust that does not intervene in the business strategy.