Matteo Novelli (Borletti Group): from laRinascente to train stations
Borletti Group invests across Europe from Luxembourg. An interview with Matteo Novelli, managing director.
What is your investment strategy?
We remain loyal to what has been our core business since 2004: focusing on the “luxury retail” sector in department stores, the “travel retail” sector in railway stations and airports and the “luxury discount” sector in shopping centres which compete with brands like McArthurGlen. We invest indirectly by carrying out analysis and by operating as a “club deal”: we invest family money and seek co-investors, be they family offices, funds or banks. For example, with Printemps, Deutsche Bank’s RREEF fund invested alongside us and our exit in 2013 generated liquidity, allowing us to diversify our investments.
Which areas of diversification have you chosen?
Our portfolio becomes more liquid and more diversified. We go to see banks but rather than giving them money to invest as some do, we identify their areas of expertise and work with them within that market segment. Our work with JP Morgan on American high yields and with Midas on European high yields is a good example of this strategy. Managers also present their funds to us. This highly diversified portfolio is managed directly. We’ve just created an open-ended investment fund with specific compartments which enables it to offer an open architecture and to be regulated.
Have you identified other opportunities?
Since 2015, we have also worked with a number of operators to create a hotel portfolio. We’ve identified a grey area in continental Europe which ranges from 5 to 40 million, because these investments pass under the radar of institutional investors and are priced too high for private investors. We find that this more direct and rather opportunistic model
produces excellent results, particularly in the 3 and 4-star market segment. We adopt a financial product approach in which we buy the walls, with a very clear model focused on the room and the breakfast. This market is very fragmented and is under pressure from the online market, which encourages the creation
of “trendy” city concepts such as Yotel and Citizen M.