In episode 2 of our VC Miniseries, we’re pleased to feature Roberto Italia, CEO of the global, evergreen investment company, Verlinvest.
Simon Brewer 02:29
In the summer, here on the Money Maze Podcast, we featured a series on private equity investing which showcased some of our highly respected large operators like Bain Capital, KKR, CD&R and Vista Equity Partners. But some of summer's large companies are today's emerging and smaller ones. And so in this mini-series, we've been keen to explore the world of venture capital and growth investing and to look at a handful of organisations that operate at a lower level in terms of size, but which are providing critical capital to early-stage companies. And if I said Oatly milk, Popchips, or Tony's Chocolonely, you may recognise brand names that weren't on supermarket shelves a few years ago, but now are, and which belong in the stable of the firm we're going to talk about today. So to understand this organisation, we're going to Brussels to talk to an Italian CEO of a global growth investor, Verlinvest, Roberto Italia. Benvenuto al Money Maze Podcast!
Roberto Italia 03:38
Grazie. Thank you so much.
Simon Brewer 03:39
It's an absolute pleasure. I'm getting some payback for having sent one daughter to school to learn Italian for her A-Level. You are sitting in Brussels. I'd like to thank Prosek Partners, the marketing communications firm, for the introduction to you. And as I've done my research, it's thrown up a whole host of questions I hope today we can explore, from young brands, the health-conscious community that's growing, the financial dynamics alongside that at a tricky point in the economic cycle. But let's start with you. As I understand, you studied at the University of Rome, but the Eternal City couldn't keep you. So tell me about those earlier days.
Roberto Italia 04:16
It could keep me, but not for long, I have to say. I mean, it was many, many years ago. I did venture myself into studying economics very early on. I was 18 years old and I couldn't crack what economics was all about so I was curious enough to join classes at a university that enabled me to enjoy that, and I graduated back in 1990. That prompted me to get into a job that was connected with making investments for an industrial group. I was fortunate enough to be there enjoying the early days of mobile telephony. That enabled me to learn what it was to build a mobile network and what it was to roll out a mobile network. I was there for about three years, and then after that, I decided that the Italian borders were not enough for me. I really wanted to enjoy more of an international experience, and I couldn't find anything better than going out to take my MBA from INSEAD, which was a one-year program that would enable me to basically be confronted with people coming from all parts of the world. And I did enjoy my year at INSEAD immensely. That was in the mid-‘90s, and since then onward, it has been private equity all along.
Simon Brewer 05:33
Right. Well, we didn't quite cross paths at INSEAD. I went and did the very lightweight version of the Advanced Management Programme there at some stage, but at least I could put it on my CV as long as people don't look too closely. Tell me about Cinven. We haven't had Cinven on the show but they're obviously a very well-known name in private equity. You started from INSEAD. Just tell me a little bit about what you did there and how your career developed.
Roberto Italia 05:57
On graduation from INSEAD, I actually joined the US private equity firm Warburg Pincus, which is also very well-known and that was a very interesting experience because it was the initial endeavour of Warburg Pincus in Europe. They had just opened the office in London, but there was a very close connection between London and New York. And that is where I spent my initial 10-year or so stint in the private equity industry, became a partner there, was pre-eminently involved with communications investments all around the globe and therefore, I was travelling a lot with the firm. But interestingly enough, the very first investment I was involved with was actually a Scandinavian company in retail, which had nothing to do with my background or my roots or even my language skills, honestly, because I speak no Scandinavian language whatsoever, but people felt it was a nice opportunity for me to learn on the job what private equity was all about. And it was indeed a very interesting experience to learn how to transform a retail business that was the 7-Eleven franchisee for the whole of Scandinavia and make it become a very iconic presence across the whole of the Scandinavian markets, and eventually actually delivered to us a very interesting return. And the business is still active, up and running in the hands of a larger Norwegian retail group. That was my start in private equity in the mid-90s. Thereafter, I joined the group that was Henderson Global Investors with a view to launch a dedicated initiative in the field of mid-market private equity, that was largely catering to the Southern European markets that I was more familiar with, I should say. I was based in London all the time but then I was travelling a lot going down to southern Europe. In the middle of the 2000s, 2005 to be precise, that's when I joined Cinven, because I wanted to engage myself in the well-known buyout world. And when I joined Cinven, the task there was for me to open up its presence in Italy. That was the plan. And therefore, after 18 months of familiarising myself with the firm in London, I moved out to Milan and opened the office out there. And we made a number of investments, a very significant one in the industrial domain, which was the segment I was in charge of. Then in 2013, I decided that there was an interesting opportunity in the market for private equity practitioners to attempt a relationship with the public markets and branched out with my own business to launch and promote a few special-purpose acquisition companies on the Italian Stock Exchange. Through those vehicles, we raised a considerable amount of money from a number of investors, made a number of business combinations, and come 2020, and that is when I joined Verlinvest as the Chief Executive Officer of the group, because most of my endeavours throughout my career were dealing with high-growth companies in a number of jurisdictions. And that's what basically the shareholders and investors of Verlinvest saw in me, an individual that could take over the arms of the company and lead it into its next stage of development.
Simon Brewer 09:19
So let's then talk about Verlinvest. The first thing is, does the name have any significance?
Roberto Italia 09:24
I'm told it does not, yet it resonates, and that's why we've decided to stick to it perhaps.
Simon Brewer 09:31
Okay. So how did the firm come about?
Roberto Italia 09:35
It was over 25 years ago. The families that grouped together had been together investors in a very large business, which is AB InBev, the brewery group. Over time, they decided that they wanted to expose themselves more to what the growth capital environment would offer them in terms of investment opportunities. And as I said, they were the precursor of the industry because they launched Verlinvest around 25 years ago and started investing already then globally out of Brussels. And their attempt was to ensure that the set of experiences and the long-term orientation of the families would be reflected into the construct of Verlinvest. And Verlinvest is a long-term investor that doesn't operate deploying funds, rather operates deploying own capital in investment initiatives. And that started out, and continues to be, to a strong extent, in the field of fast-moving consumer goods, given that the heritage of the families is pre-eminently linked with the food and beverage environment that you would clearly find in the context of AB InBev.
Simon Brewer 10:39
That is interesting because most of the firms that I encounter are running funds rather than making these direct investments, but just give us the headline numbers in terms of assets, people, offices.
Roberto Italia 11:01
Our presence is Brussels and London, so far as Europe is concerned, and we move across the ocean, we’ve got an office in New York and people in Los Angeles slash San Francisco. Then we move towards the east and we have people and an office in Mumbai, and an office in Singapore. That covers basically the globe for us. We are about 50 people together, talking about investment professionals and corporate staff. To date, we've got roughly 30 odd positions in the portfolio, that is investment in companies that we manage, different types of investments, minority investments, majority investments, for an aggregate portfolio value of a little over €2 billion.
Simon Brewer 11:46
Perfect. So let's then take it down a step and say, how would you summarise your investing philosophy?
Roberto Italia 11:54
It draws to a significant extent on our roots, I have to say. We look at certain trends that we can help drive, in a way, around what we like to call consumer revolutions. Consumer is central to our initiatives. We look for specific trends, which we have consolidated over the years and they rotate around two core axes. One is the notion of health altogether, and the other one is the notion of so-called footprint, that is, individuals look after opportunities that cater to their health and they can be across fast-moving consumer goods, across health and care service propositions, across lifestyle opportunities, across technology solutions that would enable them to enjoy better products and better services. The notion of footprint is whenever you engage with consumers nowadays, you have to provide something which is sustainable. And therefore, we like to think that those two axes intersect with each other, and they are the logical foundations of what we look after when we want to drive consumer revolutions. That is in connection with what we see in the markets. And clearly, we see market trends that we have to look at in the context of pursuing such quote-unquote 'foundations'. I can quote examples of investments we made pursuing those specific drivers. You mentioned one and it's Oatly. We felt, back in 2010, 2015, there was an opportunity to go after the evolution of the markets towards plant-based dairy-like products. That is when we stumbled into this Swedish company that had the level of capabilities in-house, specifically research and development capabilities, that to our knowledge, nobody else had. We realised that the company had focused so much on its internal developments and its internal capabilities that it had missed the opportunity of growing the business outside the boundaries of Sweden. Therefore, we felt that we were the appropriate partner for them in the context of a transition of shared ownership for us to push their ability to grow beyond Sweden. And to a significant extent, we've started that journey, but the journey is not over yet.
Simon Brewer 14:20
So I want to stay with Oatly because it's a great business case study, I suppose. I'm in an office with my colleague Will Campion, I see Oatly milk in the fridge. I left home this morning, my daughter is a disciple of Oatly milk. I wouldn't say that I am a natural advocate of non-milk but I did just try it in my coffee and it's still very nice, but it's everywhere. So it seems like through serendipity, you engage and meet Oatly. What happens next? Was it the equity participation they wanted or was it your greater network?
Roberto Italia 14:52
I would say a combination of the two. The greater network would have helped the company look beyond Sweden with confidence. That did require a significant acceleration of the brand positioning as well. The company in which we bought was not as strongly connotated as the company you see today. The engagement with management was around communicating more effectively around the brand such that it would resonate and would connect emotionally with consumers. In parallel, its roots were solidified in the form of becoming more and more a core provider of choice of solutions to customers for the purposes of moving towards alternatives to milk products. We really felt that the qualities and the key elements of oat would resonate very strongly for the discerning consumer. We needed to communicate more effectively with that discerning consumer, such that we would educate more and more consumers such that they would become discerning. And that virtuous loop, we started it. And to quote you the numbers, the company was less than a 10th of the size that it is today when we bought it, and we bought it only five years ago. So that kind of growth was taking advantage of the market becoming increasingly aware of what alternatives to milk would deliver to them, but also us being able of putting the products on the shelves. And that, believe you me, is by no means easy, because we had to basically transform the company from what it was into a company capable of delivering products globally, and delivering products globally meant that the company had to grow substantially its own manufacturing presence and, I would say, its own supply chain capabilities beyond traditional boundaries.
Simon Brewer 16:48
And I know they're in drinks and yoghurt and ice cream, but you are quite a concentrated investor when you described how many positions you have, and this is pretty large growth. So at what point and did you then have to bring others in, because there are natural limits on the size of your investments?
Roberto Italia 17:06
Rather quickly, the way we started it out, we felt that there was very meaningful opportunities in markets we knew very well. Those were clearly Europe and the United States. In those markets, we could navigate pretty much on our own. And therefore we bought Oatly together with somebody that would provide us with an angle over China, the other market that we felt was a great opportunity for us. We teamed up in a joint venture with China Resources, a very large state-owned group in China that would enable us to engage with the retail channel effectively, locally. Fast forward a couple of years, we felt that actually, the opportunity in the US was substantially more significant than we initially thought. So we felt that we needed more capital. We brought onboard the likes of Blackstone, in the context of a transaction that enabled us to endow ourselves with substantial capital above and beyond what we had available at the time. That was in 2020. And in 2021, we also thought that the markets, the public markets, would enjoy the story and the story would resonate very strongly, and so we listed the company on NASDAQ.
Simon Brewer 18:11
And therefore, the final piece of that is you get the listing, which is typically a point of exit for those who have been the early-stage investors. Do you continue to have an important stake in it?
Roberto Italia 18:21
We continue to have a very important stake. Together with China Resources, we've got about 45% of the company, and therefore, we've been experiencing the complexity of being a public company while you're going through a very challenging growth path. The company keeps growing very fast, very strongly, but it does require a lot of capital for it to fulfil the dream. The company is en route to substantially grow this year as well but the truth is that growing a business that has to deliver physical products is not easy. And we're learning it the hard way by running multiple plants simultaneously, by delivering products onto thousands of shelves at the same time. It's a very substantial management endeavour and we stand close to management to try and help them in that respect.
Simon Brewer 19:11
Isn't there a certain irony? As a private organisation making private equity-style investments, you go to the public markets, and then that shows you all of the downsides of the public market versus the private market.
Roberto Italia 19:23
Quarterly reporting and the likes is certainly something that, for fast-growing companies, you have to get accustomed to. We are learning the hard way, I have to say, but we are learning. And that kind of learning experience is something you have to draw upon and try and take advantage of. I believe that the company is now on the right charter and right course for it to keep fulfilling its mission which is very substantial relative to the opportunity at hand.
Simon Brewer 21:38
So if we just step back a little bit, I know that in doing some of this research, your company shared with me a Bain consumer survey that showed that more than 70% of consumers are willing to pay a reasonable premium for sustainability, and I know you've got Popchips. Now the other side of that, actually, she appeared as a guest on the show, that's Annachiara Marcandall, who runs Cambridge Associates’s research. Her question was to ask whether purpose-led consumer brands are really making a difference. And she said, 'Don't they typically make money by charging a premium to alternatives, so they tend to appeal only to the affluent part of the population?
Roberto Italia 22:17
For sure, the first market you go after is the more affluent part of the market. But then you really have to be good at sustaining the brand by virtue of educating the less affluent parts of the market, because in the end, if you really care about what your mission is, you've got to communicate loud and strong. And that's what we do at Oatly, we do at Vita Coco, we do at Tony's Chocolonely, but also, we do at a company like Sula, which is an Indian winemaker, and is actually India's largest winemaker. We felt that there was a very interesting opportunity for the company to actually help Indian consumers transition out of high alcohol content to lower alcohol content. That, for us, was a very valid and worthwhile mission in a market that is not that familiar with wine yet. And the company has grown substantially so and continues to do that, also in a way gearing to the part of the market which is less keen on high alcohol, which is the female side of the market, and that is actually something that we enjoy. You really have to take your steps. I think that addressing consumers with an attractive proposition that starts off by being premium requires very substantial education for all customers to learn about it. In addition to communicating to the market your virtues in a way, you really have to deliver on the notion of competitiveness, and therefore you really need to manage your products such that they reach the shelves in a competitive fashion. That does require substantial investments and a long-term approach.
Simon Brewer 24:00
Well, I can't leave that without pausing on Indian wine because those words have never been mentioned on the show. One of our key sponsors is Bordeaux Index, a great company with this fantastic online trading presence. But Indian wine, is it largely wine for the domestic market?
Roberto Italia 24:16
Absolutely, it is. Consumption in India is a fraction of what you would expect in the sort of more developed markets. I am convinced that the opportunity there is extremely sizeable. We are enjoying growth rates which are commensurate with the market opportunity in India. We also believe that the clear trend is for improving quality of Indian wines, such that over time, they will get closer and closer to the more established wine-producing countries, namely France, Spain and Italy.
Simon Brewer 24:51
Got it. So there's a consumer focus but it's not exclusive because in your portfolio, you have the food delivery company Gorillas, you have the e-bike company Pedego, if I pronounced it correctly. Like any business, you have scarce resources than you have to make decisions and prioritise. So just tell me a little bit about what's the process internally with, as you will have grown, more people coming to you with interesting ideas?
Roberto Italia 25:15
It's a great question and I can tell you, it's what keeps me awake, I wouldn't say 24 hours a day, but close to 18 hours a day to engage with each one of our offices and each one of our professionals about the pipeline. The pipeline is very rich, but as you alluded to, it's a very competitive environment, and things go very, very fast. The pipeline is very rich because people come up with interesting ideas about how to address the health requirements of consumers and how to address the mission towards a more sustainable footprint of their propositions in the eyes of consumers. We see them across the sectors in which we invest again, fast-moving consumer goods, health and care, specifically around certain healthcare propositions that in our mind are innovative. And I can quote there the notion that we have invested in a very interesting chain of Swiss acupuncture clinics, called Sinomedica, catering to a poorly known segment of the market that we believe can be more professionally managed to the point of becoming an interesting network of solutions for customers who've got a number of treatment requirements, but that stretches into so-called lifestyle. You briefly mentioned Pedego. Pedego is our way of looking at the e-bike domain. E-bikes is a name that all of us are familiar with. I don't really know anybody who doesn't have a bike in their household nowadays. But we felt that there was a market that was underserved, especially in the United States, and that is the senior market. We felt that catering e-bikes to the senior market was a way whereby you would establish a community locally that you would have to service with your own presence. And Pedego is about that and is a very interesting proposition in which we invested last year. The investment we made is actually in accelerating the growth of that business across all of the US on the premise that we actually manufacture very interesting bikes, especially designed for those kinds of people. And as I said, we've got technology in our hearts and brains every day because this is how consumers nowadays want to engage with whatever proposition they engage with. They are very well educated and they want to see the digital side of things even before a company is prepared to provide them with the digital side of their proposition. And that's why we invested in a number of situations where we felt that the company's technology was ahead of what the customers really required.
Simon Brewer 27:48
That's why it resonates because Philip Freise, who is Head of KKR's European PE business was on the show earlier in the summer, and they have made substantial investments across the e-bike space. So you've got some competition but it certainly chimes with the behavioural shifts, particularly as people get older but want to remain active. As I looked through your materials, one thing that struck me was it seems to be quite a youthful team. And while that has great merit, we're hitting a tricky environment where experience may count for something. There's got to be a balance, isn't there, between youthful enthusiasm and deep-rooted experience, particularly as one has to navigate through tricky periods which can be longer. How do you think about that in terms of managing the business?
Roberto Italia 28:33
I'm glad you asked that question because it is actually making me engage with all of my team members very regularly, because in the end, the kinds of dislocations we are going through nowadays are unprecedented even for the grey-haired one like me…or the less haired one like me! I really believe that we have not seen the severity of changes we are exposed to right now. We are in the middle of a gigantic structural set of changes around the notion of reshoring, just to quote one, that is manufacturing is moving away from the global environment that we've been used to, whereby your supply chain was all over the place and you wouldn't care because logistics was not an issue, to a completely different environment nowadays, where you really care about where your supply chain is and the closer, the nearer, the better. That is one example. But then you've got the juncture-related shocks that we are exposed to, supply-side inflationary pressures of gigantic proportions. We've seen it with our own eyes in the transformation of basic products such as tomatoes in our portfolio company Mutti, because if you collect and go harvest tomatoes in the months of July and August and September in Italy, and in order for you to deliver quality, you have to transform such tomatoes into canned products. I would say momentarily upon harvesting them, you stumble into gas prices that are the highest ever recorded in Italy, and that is what Mutti had to confront itself with. Those lessons are learned the hard way, that is you learn them on the job and you don't forget about them. So coming back from a summer which was of shocks of all kinds, we grouped as a team and we focused on the elements that would make our companies stronger, in spite of the set of circumstances. And we could engage with our companies around that, largely because of our long-term orientation. We don't panic. We do not have any pressure coming from our shareholders. We are here for the long term. Clearly, we are financially minded and therefore we look at the traditional metrics of money on invested capital, IRRs and the likes, because this is how we are incentivised. But the truth is that we can afford looking at such dislocations with a trajectory that goes beyond the short term. The impression we have is that the changes we are going through are going to stay for a while and therefore we have to engage around those and continue delivering value to our customers, because that is the only basis on which you can try and recover some of the cost inflation that all of our portfolio companies are experiencing. This is an inflationary environment. We are seeing price increases across the spectrum for most products being delivered to consumers. What keeps me awake at night is, will consumers keep buying in the same way? And I don't think so. We've got to address our products such that they really fulfill what customers want. We have to ensure that our propositions are more complete than they used to be. And I can quote you an example there. Pursuing one of our key trends of investments which is in the pet domain, we bought the largest pet retail chain in Belgium called Tom & Co. This is a space where we made investments over the years and where we have very special experience, I would say, and that experience cuts across the US where we invested in a company called Chewy, Europe where we have our assets in Tom & Co, and even India, where we have a stake in a company called Heads Up For Tails, which has the goal of becoming the premium provider of choice to Indian consumers for their own pet requirements. With Tom & Co, the proposition there is confronting with our substantial share of the market in Belgium, and the fact that we are a dominant player there by also engaging with our customers telling them if you have to increase prices, we do not want to lose the customer, because we know that they're feeling the pinch. And we need to engage with them constructively. That is something that is telling us a lot about consumer behaviour and is even enabling us to reinforce the relationship with customers. So on the job, our team, in spite of the youth or youthful appearance, I should say, because some of them are not that youthful, they look young, and they behave as if they were younger than they actually are, which is good with founders. Bear in mind that we as an organisation tend to spend time with young people that have got great ideas and we miss out on the experience and the reach. And that's why we like to complement with such people. At present, I'm of the view that our engagement with the market circumstances is making us grow a lot and making us even readier for us to confront opportunities, which is what we're doing day in day out.
Simon Brewer 33:42
Yeah. And history has always shown us that these dislocations throw out opportunities and those that are carrying too much debt run into trouble and those that are in cash or have capacity take advantage. But just before we leave brands, one of your colleagues, Ben Black, described heritage brands as being so important. On your own, you mentioned Mutti, which although I've never seen it in the UK, it's an Italian sauce maker. And we had Permira on the show earlier in the year and Tara Alhadeff, who looks after the brands, and she said, 'Heritage brands need a different lens. They are where the magic can happen.' And I'm not comparing necessarily Valentino with Mutti tomato sauce, but how do you think about older brands because a lot of the other names you've talked about are youthful brands?
Roberto Italia 34:27
This is an exciting question, because this is what takes our time nowadays. We've seen a lot of potential for brands that have not moved recently as fast as they could have in our mind. To such brands, we think we can contribute a lot. We are engaging with a number of such entrepreneurs. With Mutti, it was the same story. I can draw a clear analogy there. Francesco Mutti is an excellent entrepreneur. He does live and breathe the company in a way that few others in my entire experience I've ever seen. Engaging with us, he has realised that the company had potential beyond traditional tomato products. The business was 80% in Italy when we bought into it. Now, Italy is less than 50% of the turnover. The business was traditional tomato products. Innovative tomato products, like I mentioned to you, tomato sauces, because we're all avid consumers of those, are becoming a very substantial proportion of revenues and that required a spin towards innovation that Francesco wasn't prepared to give to its business prior to our joining. And our joining him, very humbly, I have to say, because we are immensely respectful of the way he conducts his business, has been very successful over the years. And I really believe that Mutti is a company that you will hear a lot about because any consumer I stumbled into has got only words of joy when they talk to me about the product. And it always starts with the fundamental quality of the product, and Mutti is second to none in that respect.
Simon Brewer 36:02
Very interesting. Having been in the investment world for a long time, one of the most valuable things one can do after a purchase and after a sale is a post-mortem. And it's easy to talk about one's successes, but one often learns most from the things that haven't worked. And I wonder whether you could just talk about what lessons you've learned when things haven't followed the path that you hoped.
Roberto Italia 36:22
It's the other side of the coin of success. In my mind, when you're successful, it's always down to the quality of the people that you work with, and I'm talking specifically about your investment companies. The leaders of the successful investment companies are a very special breed. Any special breed, talking about an analogy around pets, you really have to look after that special breed. And the lesson I've learned over the years is that anybody in my position should not underestimate how life circumstances may affect any leader. You really have to be close to your leaders, engage with them, and make sure that you engage with them specifically when there are certain changes, because their attitude may change and may have repercussions on the way they manage their companies. As a private equity investor who privileges active ownership, active ownership for me is staying close to your leaders, engaging with them throughout, making sure that you support them when they need the support, because they won't be asking for that support. You need to be there to provide it.
Simon Brewer 36:23
Now, when you've invested, as you have done in some of these brands, and then had to or wanted to reach out to other investors to join you because the size of the opportunity but also the size of the financing is larger than maybe originally envisaged or the opportunity is greater, how do you manage what can be a tension of competing interest, because some groups have different timelines and just different ways of doing things?
Roberto Italia 37:54
It's a great question and I can tell you that rarely, I have a definitive answer to it. It does require engaging with the counterpart and you really need to see the other party in the eyes and figure out that you can engage in a dialogue constructively. We've done it over the years with a number of counterparts, with a number of other family offices in the US, Europe and in India as well. We've done it with established private equity operators. A year ago, we sold one of our companies to BC Partners and the relationship was so good that we decided to stay on with them as a meaningful investor alongside BC Partners and GIC. So I believe that it is a function of what we can contribute. We do not need to deploy capital, I want to emphasize. If we do not need to deploy capital, we have to choose to deploy capital alongside certain people. And therefore, we have to make a conscientious decision that those people are good to work with and we would be contributing to the good as well. Take it deal by deal. The lesson is to make sure that the rules of the game are very clear from the very start. Draw their experience from examples of the past, learn about them, be familiar with them and then get along. Getting along requires being prepared to undergo compromises. Compromises are required for sure.
Simon Brewer 39:19
Got it. Well, it was Joseph Schumpeter who said, 'Profit is the payment you get when you take advantage of change.' And it seems like you're doing a lot of that. I've got some more general questions for you if I may. Which brand out there across any field would you say you admire most?
Roberto Italia 39:36
There is one in food which I am in love with, and that is Lavazza. Lavazza is a coffee company that has been growing relentlessly over the years. They have transformed themselves from being a family business into becoming a manager-led business with a very strong connection with the family without losing its roots over the years, expanding the product range in a way whereby they would clearly resonate with consumers. Moving away from food, there is one that is the darling of everybody, I have to believe, and that is Patagonia because in the end, we are all in love with the entrepreneur who passed away recently. He did something phenomenal. My closet is full of Patagonia stuff and that is to me a reflection of the notion that I'm more in love with what the brand means than the products themselves. And that is ideally what people who invest in brands should go after.
Simon Brewer 40:35
That's also what Tara from Permira said.
Roberto Italia 40:37
I'm not surprised in the slightest.
Simon Brewer 40:40
We've got an important youthful cohort, students and others, thinking about their future careers. You've seen a lot of the private equity growth capitals, but you've also seen operating businesses. For young people thinking about careers, what would be your key one or two pointers?
Roberto Italia 40:56
First and foremost, go after your passions. You really have to scratch the surface of what you think you like. You really have to understand what you truly like and then go after that relentlessly. That can be done in private equity, for sure. It's been a phenomenal journey for me. I've learned so much. I am structurally and naturally curious and I think that there is no better business than private equity to appeal to your curiosity because you engage intellectually with people, you engage emotionally with people. You are in charge of your own actions and you are bound to your own responsibilities. And therefore, you've got to deliver results because that is how the business works. That's why there has been so many people that have gone into the industry recently that one would say there are too many people in private equity. The truth is, there is a lot of capital and this capital can be deployed. I think that capital investing is a key ingredient of the recipe towards growth and prosperity and that's why I believe that private equity can be a key component of such a recipe. And quality people and quality youngsters should definitely look at private equity if this is what their passion commands.
Simon Brewer 41:06
Three closing questions, how do you relax?
Roberto Italia 41:43
Depends on where I am, because I'm always on the road. Whenever I can, I tend to spend a couple of hours walking in the forest with my dogs because I really enjoy that. They provide me with a level of energy that gives me a kick, a positive kick, of course. And that is something I tend to do at least every other week, whenever possible. I live in Switzerland and that makes things relatively easy because mountains are nearby, wherever you live, and you can go. With a 10-minute drive, you are on track and you can enjoy hiking for three or four hours. Alternatively, reading is the way, all around fiction and ideally historical fiction the likes of Ken Follett, Umberto Eco, and more recently, certain Scandinavian authors that I like a lot because they combine action with history and with nature as well.
Simon Brewer 43:13
I know you've left Rome, but obviously, you're an Italian and therefore you come from that fantastic, almost unsurpassed country in terms of its food. If you are going to go and eat anywhere in Italy, where's your favourite region?
Roberto Italia 43:28
It must be Tuscany. It must be Tuscany because of the quality of the local ingredients and the fact that they tend to work on them in a way whereby it is a little more international and easier to digest for the average palate.
Simon Brewer 43:42
Great. And finally, who in the world of sport, finance, business, politics, who would you most like to have dinner with?
Roberto Italia 43:51
One name springs to mind, Elon Musk. I have my special passion for space. I am the Chairman of a space launcher company and therefore over the years, I've engaged with astronauts and with people who deal with space a lot. Elon Musk has done something incredible with SpaceX, but not only with SpaceX. You look at Tesla, you look at PayPal, you look at Hyperloop, and now you look at Twitter. I don't know where the guy gets the hours, but whatever he says has got a meaning. And that is something that makes me think he wants to go to Mars because he probably comes from there.
Simon Brewer 44:29
Well, we haven't had him on the show. We'd like him on the show. After he's appeared, maybe you can both attend one of our periodic guest dinners. That would make some very interesting conversation.
Roberto Italia 44:38
Please keep me in mind!
Simon Brewer 44:41
We'll have a beautiful dinner with some Mutti’s tomato sauce on one of the courses! Roberto, I've learned a lot. I always summarise a few things but we keep on coming back to this powerful current, perhaps irreversible trend, of reshoring and your three words were ‘closer, nearer, better’, which I think absolutely resonate, but also some of the innovative things that you are up to. I'm quite intrigued, I wrote down this Swiss acupuncture business. Most of us have had acupuncture. I've been struggling with my back for a while. It's a mysterious and opaque business without any global champions, I would say, so I can absolutely see the benefit. So thank you. I'm sure there are lots of people who are saying thank you for allowing us to have Oatly milk in our fridges and in our coffee. Keep up the good work and we look forward to meeting you.
Roberto Italia 45:29
Indeed. Look forward to that. Thank you so much.
In episode 2 of our VC Miniseries, we’re pleased to feature Roberto Italia, CEO of the global, evergreen investment company, Verlinvest.
Verlinvest’s portfolio brands include Oatly, Pedego, Purplle.com, Vita Coco, Chewy.com and Tony’s Chocolonely to name a few, and is backed by the families behind AB InBev (the Belgium-based brewing multinational).
The discussion covers developing the Oatly brand, investment holding periods, potential exits, consumers’ changing appetites, and the challenges around supply chain re-ordering.
Roberto also discusses the headwinds of dealing with inflation, the key takeaways from past investments and the exciting landscape ahead.
Verlinvest is an international evergreen investment company. Established in 1995 with backing from the families behind AB InBev, they focus on growth-companies in FMCG, health, consumer tech and lifestyle. They have over €2 billion in AUM, and count brands such as Oatly, Vita Coco, Tony’s Chocolonely, Mutti and Pedego in their portfolio.
In the episode, Roberto discusses their decision to invest in Oatly, a Swedish oat milk brand, and how Verlinvest supported the business in its international expansion. Roberto also covers their 2016 decision to take a 24.5% stake in Mutti, an Italian tomato products firm. He also discusses why they invested in Pedego, the largest retailer of e-bikes in the U.S.
Find out more about the opportunities in European private markets, including the growing e-bike sector, via our recent episode with Philipp Freise, Co-Head of European Private Equity at KKR. Plus, learn more about consumer brand investing in our interview with Tara Alhadeff, Partner at Permira.
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