TURIN, Italy (Reuters) - Italian investment company Exor, the listed holding company for Fiat’s founding family the Agnellis, plans to spend a total of at least 2 billion euros ($2.7 billion) on two new investments, most likely in the services sector, Chairman and CEO John Elkann said on Thursday.
Elkann said Exor, whose three existing major investments include controlling stakes in Fiat Chrysler Automobiles (FCA), tractor and truck maker CNH Industrial and real estate group Cushman & Wakefield, would look at companies that are similar to those in that they have roots in Europe or America but operate globally.
“It’s more likely that we will make the investments in sectors that absorb less capital than CNH Industrial or FCA and which are more in the services sector, and not industrials,” Elkann told reporters on the sidelines of a shareholder meeting in Turin.
“We are looking at many things, but we are not in a hurry,” he added. “We will wait until the right opportunity comes.”
Elkann later said that each of the two investments would be worth at least 1 billion euros, but stressed that supporting the firms in which Exor already holds stakes would remain a priority.
“We have in mind 1 billion euros (for each new investment) but we could do more”, Elkann said in a call with analysts.
Exor could increase its debt to help make the acquisitions, but does not want to jeopardise its investment grade credit rating.
In March media reports suggested that Exor was in talks to buy a stake in reinsurer Swiss Re, but both firms denied it.
Exor has around 2.8 billion euros in cash, and additional investments have long been anticipated by the market.
Its holdings in FCA, CNH Industrial and Cushman & Wakefield make up more than half of Exor’s net asset value, which stood at 9.26 billion euros at May 16.
Exor’s future profits largely depend on the performance of those investments, and ambitious targets announced earlier this month by FCA and CNH Industrial have been met with scepticism.
FCA, where Elkann is also chairman, plans to invest 48 billion euros over five years to boost sales by 60 percent to 7 million cars and increase net profit five-fold - targets analysts said were highly ambitious, but which Elkann again defended as doable.
“It’s not an unrealistic plan,” he said, adding that the carmaker had no need for another partner in Asia to reach its targets nor needed a share issue to finance the five-year plan.
However, Elkann reiterated that Exor would provide additional capital if necessary to boost the prospects of the companies in which it invests, including FCA.
Exor has focused over the past five years on streamlining its structure, selling smaller assets and diversifying its geographic exposure.
More than two thirds of Exor’s consolidated revenues are now made outside of Europe, up from 40 percent five years ago.
Shares in Exor, which have risen over 400 percent in that time, closed down 2.2 percent at 30.69 euros on Thursday.
Elkann said Exor had no plans to reduce its stake in CNH Industrial, and said the company was content with the indirect stake it holds in RCS Mediagroup via Fiat. With a stake of 20.6 percent, Fiat is the top shareholder in RCS, publisher of leading Italian daily Corriere della Sera.
RCS does not need another capital increase, Elkann added.
Additional reporting by Gianni Montani and Stefano Rebaudo; Editing by Greg Mahlich and Mark Potter