Italian authorities are investigating whether the Chinese-backed investors within luxury yacht maker Ferretti have violated the “Golden Powers” regulations by failing to fully disclose their shareholdings to the Italian officials, according to three government officials who spoke to Reuters on Wednesday, May 27th.
The controversy stems from a fierce battle for control within Ferretti earlier this month. Leading the challenge against the Chinese investors was the Czech investment firm KKCG Maritime, which subsequently urged the Italian government to take action.
At a crucial shareholders meeting held on May 14, Ferretti’s shareholders engaged in a power struggle. The results showed that the majority of shareholders chose to align with the major shareholder, the Chinese Weichai Group, allowing the Chinese investors to maintain control of the luxury yacht giant. This vote also officially marked the end of the 12-year tenure of CEO Alberto Galassi, who was ousted and replaced by Stassi Anastassov, nominated by Weichai.
The relationship between Weichai Group, a subsidiary of China’s state-owned Shandong Heavy Industry Group, and Ferretti dates back to 2012 when Weichai led the strategic restructuring of Ferretti during its debt crisis, acquiring 75% of Ferretti’s shares for €374 million. Despite Ferretti’s subsequent dual listing in Hong Kong in 2022 and Milan in 2023, diluting some shares, Weichai Group still firmly holds over 35% of Ferretti’s shares, making it the largest single shareholder with the most significant influence.
Galassi, the ousted CEO, is a veteran manager in the Italian business community. Since assuming the role of CEO in 2014, he has been the most trusted representative of Weichai Group in Europe, maintaining a decade-long “honeymoon period” between the two parties. However, with Ferretti’s listing in Milan, Galassi and the local Italian management gradually moved closer to the new European capital (such as Czech KKCG) and attempted to push for the “de-Chinese” transformation of the company, raising strong concerns from Weichai Group.
The core issue at the shareholders’ meeting on May 14 was whether Ferretti’s control should remain with the major shareholder Weichai Group or shift to a group of nominees supported by Galassi and KKCG with European and American backgrounds.
In the end, Weichai Group was able to mobilize shareholders to repel the internal “defection” and swiftly appointed Anastassov, who brings rich international luxury goods and retail management experience, to take over. KKCG then turned to the Italian government to report alleged irregularities in the voting process by the Chinese investors.
Italian Prime Minister Giorgia Meloni’s office is currently conducting a full investigation to determine whether certain individual or joint investors have secretly purchased Ferretti stocks or increased their holdings without notifying the authorities as required by regulations in defense or security assets listed in Milan.
Under Italian law, when external share changes exceed specific thresholds of 3%, 5%, 10%, 15%, and up to 50% in strategic companies, the Cabinet Office must approve the shareholding situation.
Despite Ferretti’s renowned reputation for building luxury civilian yachts like Riva and Wally, the company also controls a small security business department responsible for producing military patrol boats and defense equipment. While Ferretti’s management previously considered this business non-core and attempted to sell it, KKCG insisted that Ferretti automatically falls under the jurisdiction of Italy’s “Golden Powers” regulations due to the existence of this military industry sector.
When asked to comment, the new CEO, Anastassov, told Reuters that he is currently focused on managing the business and relationships with Ferretti’s partners, stating that he is not involved in matters related to board responsibilities regarding shares and policies.
However, signs of capital inflows have long been apparent. The Italian business newspaper “MF” reported before the shareholders’ meeting that another Chinese investor, Bank of China, had quietly reached a shareholding of around 2% in Ferretti.
Ferretti only disclosed shareholdings exceeding 5% at the May 14 meeting. The company said it would later announce a complete list of shareholders and detailed records of shareholding ratios. Sources revealed that Italian companies and officials from the Ministry of Industry are currently holding preliminary hearings with several unnamed parties related to this case.
This is not the first time Italy has imposed restrictions on Chinese investments in domestic companies for security reasons. In recent years, government authorities have remained highly vigilant against Chinese expansions in technology, infrastructure, and traditional manufacturing sectors.
Last month, the Meloni government invoked the “Golden Powers” to forcibly reduce the number of board members that China’s state-owned enterprise Sinochem could appoint at Pirelli, an Italian tire manufacturer, and restrict its access to core technology.
The Italian government’s intervention in the Pirelli case has also greatly helped companies in “hedging.” In recent years, the US government has placed many Chinese state-owned enterprises with ties to the Chinese military-industrial complex (including some associated entities of Sinochem) on sanction lists and imposed restrictions on transactions.
If Pirelli were to be fully controlled by Sinochem, it could trigger additional restrictions from the US Treasury or Commerce Department, causing Pirelli to lose significant market share in North America and opportunities for cooperation in cutting-edge tire technology.