Moleskine turns paper into $363m profit for owner

Moleskine website

Syntegra Capital bought a majority stake in Milan-based Moleskine in 2006, investing €17 million. It will earn a total of 19 times as much when the sale of its remaining stake is completed, managing partner Marco Ariello said in an interview. D’Ieteren, a Belgian family-owned company, said on September 22 that it will buy Moleskine and delist its shares from the Milan stock exchange.

The 2006 purchase of Moleskine was a bet that people would keep buying notebooks in an increasingly digital world. The company’s focus on design and its creation of a brand associated with artists and writers won loyal customers, said Ariello, who is also chairman of Moleskine.

“It was not an obvious investment. There were people who thought digital could be a threat and there are still people who believe that handwriting will be over at some point,” Ariello said. “People get a Moleskine notebook and an iPhone. The typical Moleskine customers are millennials and are typically highly educated and highly digitalised. They use both paper and digital products.”

Syntegra Capital installed a new chief executive at Moleskine — Arrigo Berni — a former executive at luxury Italian jewelry maker Bulgari. He increased Moleskine’s employees from 20 to about 450 as sales expanded almost 10 times over a decade to €128.2 million in 2015. Net profit increased 64.1% to €27.1 million in 2015 compared with the previous year.

Berni said that when Ariello first talked to him about the job, he said, “Moleskine what?” However, his wife was already a customer. “She said, `how could you possibly not know? They are the coolest thing,’’’ Berni recalled in an interview.

Moleskine was a word used by British travel writer Bruce Chatwin to describe a notebook made in the French city of Tours until the 1980s. In the 1990s, a Milanese publisher started making notebooks inspired by the original French design and using the Moleskine name, which it trademarked.

“It was reintroduced by replicating the product, a hardcover black notebook with an elastic band and rounded corners. That was the one that was described by Chatwin,” Berni said. “Similar notebooks were also used by other artists,” he said. “It’s the kind of notebook that you find in the Picasso museum and the Van Gogh museum.”

Moleskine made less than 9% of its sales in Italy in 2015. It has expanded worldwide, with 38.8% of 2015 sales coming from the Americas and 18% from Asia. The company is adding new products such as travel goods and services including coffee shops.

Syntegra Capital was started in 1997 by French bank Societe Generale and became an independent company in 2009. Investors in its funds include Goldman Sachs and the Ford Foundation.

The private equity firm earned dividends from Moleskine and sold a 15% stake to another private equity firm in 2010. It sold shares in Moleskine to the public in 2013 and sold more shares in 2015. Now it’s selling its remaining 35% stake to D’Ieteren. Private equity firms typically sell assets within five years of buying them.

Syntegra Capital had chances to sell all of its Moleskine shares earlier but took an “educated decision to resist the temptation”, Ariello said. “At some point you need to draw a line in private equity.”

D’Ieteren’s acquisition values Moleskine at €506 million. The Belgian company is diversifying into stationary after more than two centuries of investing in the transport industry, from wheels to vehicle glass repair. D’Ieteren expects demand to keep growing for Moleskine notebooks.

“People like to have a good companion next to their smartphone,” Arnaud Laviolette, D’leteren’s chief financial officer, said in an interview.

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