Temasek gets fashionable with 10% stake in Ermenegildo Zegna

SINGAPORE: Singapore’s state investor Temasek Holdings has purchased a tenth of Italian fashion label Ermenegildo Zegna Group. This transaction is estimated at US$220 million (S$284 million) and is Temasek’s latest foray into the luxury fashion market.

Five per cent was bought straight from Zegna, and the remaining 5% was acquired via open market transactions. This tactic demonstrates Temasek’s careful approach to breaking into the luxury retail market.

Started as a wool mill over a century ago, the Italian fashion house has gradually become a well-known name in global fashion. With recent purchases of Tom Ford International and a 2.2% increase in annual sales reaching €1.95 billion (S$2.89 billion) in 2024, the company aims for more growth worldwide.

Speaking on the investment, Gildo Zegna, chairman and CEO of the group, said, “I am delighted to welcome Temasek as a strategic investor in our group’s shareholder base. Their investment is a strong endorsement of our vision and long-term growth potential, while firmly recognising the global significance of the Italian luxury sector. With Temasek’s partnership, we are even better positioned to help strengthen our organic expansion globally and to reinforce our unique role as a custodian of truly authentic brands.”

Nagi Hamiyeh, who oversees Temasek’s efforts in Europe, the Middle East and Africa, will join Zegna’s board as part of the agreement.

This investment arrives at a time when the luxury market is facing mixed conditions. Uncertainties around the world are putting pressure on some brands. High-spending customers, who spend more than €50,000 a year, continue to be consistent, making up 23% of the industry’s overall value.

For Temasek, the Zegna deal fits into broader investment goals. As of March 31, the firm’s portfolio reached US$434 billion, an increase of US$45 billion from the previous year. Diversifying into global luxury is an extension of that strategy.

Temasek paid US$8.95 per share for the investment. Proceeds from the investment will help Zegna scale globally, especially in Asia. Temasek’s regional presence and Asia Pacific focus are likely to facilitate new growth opportunities.

The deal is a strategic alliance as well as a financial one.

In a media statement, Hamiyeh commented: “Our investment in them underscores our ongoing commitment to support leading European businesses with strong track records and global potential.”