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CIR – Compagnie Industriali Riunite

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CIR is the holding company of a leading Italian industrial group active in five business areas (as a % of NAV):

48% Energy -electricity and gas –through Sorgenia(private holding together with Verbund, biggest Austrian utility)

  • One of ltaly’s largest energy companies, electricity supplier to 500k businesses

15% Media-Gruppo Editoriale L’Espresso (listed on MIB: ES)

  • Leading media business incl. dailies, periodicals, radio, Internet, TV and advertising. 50% of revenue from advertising.

12% Automotive components-engine and suspension systems –Sogefi(listed on MIB: SO)

  • Globally diversified and innovative automotive business.

10% Healthcare-nursing homes, rehabilitation and hospital facilities –KOS (private JV with AXA Private Equity Partners)

  • Defensive and growing business. Leader in Italian long-term care.

15% Non-core investments-private equity, venture capital, minority interests and new initiatives.


CIR – Investment Thesis

Idea: Excessive holding discount on cyclically depressed asset values.

Assumptions: Viable businesses in viable industries under shareholder friendly management.

Strategically attractive energy business to enter the Italian market. Austrian partner Verbund has already expressed interest in the past. Cyclically challenged but margins starting to improve. Lower nat gas prices through renegotiation of long-term supply contracts, efficiency measures and debtreduction through non-core asset sales.

Media business is highly sensitive to economy and should perform well once economy stabilizes. National newsprint business structurally challenged. Digital business attractive due to high domestic reach for daily news. No.1 website in Italy for daily relevant news (similar to CNN or FOX in US). Italian digital advertising market still underdeveloped. Valuable regional brands. Stock looks cheap.

Automotive business boosted by cyclical upswing in US. Lower risk through increasing global diversification. Track record for innovation. Listed stock looks considerably undervalued.

Health care business is maturing after a build-out phase. Focus on profitability. New JV in India.

High probability of significant legal award (40% of market cap) –“Mondadori”.

CIR – Compagnie Industriali Riunite

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