Billionaire Del Vecchio Asks OK to Buy 20% of Mediobanca

(Bloomberg) -- Italian eyewear billionaire Leonardo Del Vecchio stepped up his efforts to become a bigger player in Italy's finance industry, asking for approval to raise his stake in Mediobanca SpA to as much as 20%. The lender's shares jumped as much as 14%.

Del Vecchio, who owns 10% of Italy's largest publicly traded investment bank, submitted the request to the Bank of Italy on May 29, he said in a statement on Monday, a day after press speculation mounted on his move.

The 85-year-old founder of Luxottica SpA is seeking to diversify his fortune into banking, which typically grants higher yields than the eyewear industry. He also wants to preserve Mediobanca's Italian roots and is prepared to defend the bank from hostile takeover approaches, people familiar with his strategy said in February. That month Bloomberg reported that he was in informal talks with the European Central Bank on a preliminary request to double his stake to as much as 20%.

The regulator has 60 working days to answer the request, according to the statement.

Mediobanca was up 7.8% to 6.29 euros as of 1:38 p.m., giving the company a market value of 5.58 billion euros ($6.2 billion). That cuts this year's decline to 36%.

Del Vecchio and his investment vehicle, Delfin, became vocal critics of what they saw as an overly conservative strategy under Chief Executive Officer Alberto Nagel after buying their initial stake. The billionaire intends to support the CEO as long as he delivers the expected returns, people familiar with the matter have said.

Del Vecchio's moves raise concerns over a lack of clarity about his strategic goals regarding the bank, Citigroup analyst Azzurra Guelfi said in a note. “Mr. Del Vecchio is a successful entrepreneur but with limited experience in the banking business,” she said, adding that “the market would like to have clarity on the potential strategy review of the group and impact on the business mix, governance and shareholding.”

Stock Soars

While Del Vecchio has said he wants to bring stability to the bank, analysts and local media have speculated he's really targeting governance changes and more influence at Mediobanca and Assicurazioni Generali SpA, the insurer in which Mediobanca is the single biggest investor with 13%, while Del Vecchio owns almost 5%.

Del Vecchio, now chairman of Essilor Luxottica SA, sees the opportunity to expand Generali into a top European player with strong Italian roots, the people said. Generali has been the subject of M&A speculation before. Intesa Sanpaolo SpA in 2017 considered a merger with insurer before deciding not to pursue a deal.

The billionaire could even use his own funds to support the investment bank's expansion, they said, adding that aids Francesco Milleri, Luxottica's CEO, and JP Morgan Chase & Co.'s Vittorio Grilli, an ex-finance minister, are helping with strategy.

Del Vecchio joined Milan's business establishment last year with the surprise announcement of a $1 billion investment in Mediobanca. The bank, founded in 1946 to help finance postwar reconstruction, was the hub of the country's financial system for over 50 years, though the lender in 2013 made the dramatic decision to divest holdings and focus on retail and investment banking.