Ferretti Struggles with Power Distribution and Accusations of Espionage from Major Shareholder, Weichai

Ferretti, a renowned name in the luxury yacht constructing arena, is navigating troubled waters, reeling under reported governance tensions with Weichai Group, its most massive shareholder. The Chinese investor has reportedly accused Ferretti’s management of reducing its board representative’s role and consolidating power at the iconic Italian shipyard. According to details referenced from Bloomberg, Weichai, which stakes a claim of ownership to 37.5% of Ferretti, voiced apprehension about its directors being cut off from the helm at the Forlì headquarters. The shareholders were reportedly reduced to sporadic, peripheral assignments in Milan. The allegations delve deeper with Weichai’s internal memo pointing towards a recent hierarchy rearrangement that it believes to centralize decision-making clout into CEO Alberto Galassi’s hands. Weichai carved out its stake in the entity in 2012, proving instrumental in Ferretti’s Hong Kong IPO in 2022 followed by a Milan listing in June 2023. Despite the governance contentions, Ferretti’s revenues were in the ballpark of €1.2 billion the previous year, and its order book continues to grow. While it strives to satiate its expansionist ambitions in Asia, Ferretti teeters on a delicate balancing act, facing growing European scrutiny over Chinese investments. The disagreement also resurrects questions about the corporation’s governance following an investigation into eavesdropping devices unearthed at its Milan offices. The scandal revolving around eavesdropping devices came to light with the findings of a counter-surveillance team hired by Xu Xinyu, a Chinese board representative. A contentious share buyback proposition was also seen earlier in 2024, contributing to an extensive divide between management and Weichai. Italy’s regulation over foreign investment in strategic industries, coined as the “golden power” rules, might be invoked in light of these tensions. Potential government intervention from Rome is not uncharted territory for Chinese investors, with parallels drawn from the case of China’s Sinochem’s control over tyre-maker Pirelli. This current feud might offer an initial litmus test for these laws relating to foreign investors in Italy’s manufacturing sector and luxurious markets. Both Ferretti and Weichai chose to withhold comments on these governance taxings.