17Many fell into the trap of spending too much
time and money on continuous new model
development and not enough time on building
and upgrading – fast and efficiently – the models
that were already selling well. I was eternally
grateful for the accountant’s wise advice.
By the time we sold Hunter Boats in 2003,
the boatbuilding game had changed out of
all recognition. A ‘big’ production yacht had
grown from 30ft to over 60ft. So factories got
bigger, new model development costs became
stratospheric and expensive new CAD-controlled
tools and multi-axis milling machines became
de rigueur. It would only take the next recession
to do its worst and upset apple carts.
And so it came to pass. When, with impeccable
timing, Herrman and Melti pocketed their
rumoured €1.1bn in 2007, Bavaria built 3,
boats a year. By 2009 this had tumbled to less
than 1,000. Recovery from a hit of this magnitude
was slow and painful and even though Bavaria
developed a stream of successful bigger models,
annual production was still around 1,000 when it
went into self-administration this March.
And, despite re-funding over the years,
it had negative equity of over €200 million.
The solution probably lies with a new investor
starting with a clean sheet or with a publicly
quoted company looking for expansion.
After all, Groupe Beneteau, quoted on
the Euronext exchange, makes this work. It
continues to invest in new models. Its Lagoon
range dominates the ever-expanding cruising
catamaran market and it has increased its
revenue target to €1.5 billion with operating
margins revised upwards to 8.5-9%.
Hanse Yachts owners Aurelius Capital and
CEO Dr Jens Gerhardt have also expanded Hanse
successfully, recently adding French catamaran
builder Privilège to its portfolio of ranges.
Progress on the motor yacht front also looks
promising. Sunseeker is moving ahead under
Wanda Group’s ownership. Bernard Arnault’s
LVMH, Groupe Arnault and L Capital, buyers
of Princess in 2008, have invested heavily in
new models and sales are booming stretching
into 2020 and 2021 deliveries on some models.
Meanwhile, Fairline is recovering well after
Russian investors Alexander Volov
and Igor Glyanenko bought the
company out of administration in
Jan 2016.
Is there still a future for private
equity in sailboat building? There
have been success stories. But
several involve wealthy investors
who have a passion for sailing.
They are enthusiasts who could
be happy with modest annual
returns as opposed to the 15% IRR
(including rapid growth) required
by most private equity firms.
Leonardo Ferragamo, a dedicated sailor, and
a group of investors have controlled Nautor’s
Swan since 1998. They have successfully
developed this leading marque, so Swans still sit
at the pinnacle of the yachting world.
Then there’s Hans Georg Näder, president
of the Otto Bock Group, a world leader in
orthopaedics. He has owned six Baltic Yachts-
built yachts and acquired 80% of this prominent
company in 2013. He told Justin Ratcliffe of
Superyacht Report: “We have to earn the
money to reinvest, but there is no burden for
growth and I don’t want a shipyard with 500
employees... We want interesting, profitable
projects where we can use our capacity and
know-how to best effect.”
David Tydeman, former CEO of Oyster Yachts,
who’s seen it all, summed this up saying such
companies are owned by private individuals who
are really only accountable to themselves.
“They can make different decisions about
what returns on investment they need.
Leonardo Ferragamo and Hans Georg Näder
are passionate sailors who enjoy owning and
running their yacht building companies, as did
Richard Matthews with Oyster until 2008. They
make decisions differently to the private equity
and corporate owners.”“We have a clear concept.
We only do what we can
do well. That means the
name Hallberg-Rassy is well
known all over the world and
people know what to expect. We have
small, efficient management and
control over our costs, and a good
dealer network around the world with
knowledgeable staff.
“There is a market for all kinds of
boats but a premium boat can be
built in smaller numbers, and fewer
units can be profitable. When a
producer needs high volume to make
money, that can be a problem.”
Magnus Rassy, CEO and
owner, Hallberg-RassyWhat they’re saying
“Ten years ago a ton of
private equity went
into overvalued boat
companies. Bavaria was
totally indebted and they
were trying to trade their way out
of an enormous debt pile. They were
on a hiding to nothing.
“Investors want a return and want
it in five years, they don’t want to own
an asset. In the boat industry, five
years is not a long time in planning
anything.
“The margins are probably better
at the moment and have improved
because the market has improved.
There is really strong growth in
some areas.”
Bill Dixon, yacht designer“Some yards were sold for
premium prices as the
financial crisis broke out.
The large debts introduced
as these companies were
sold were too much financially for
the companies to absorb.
“The market for yachts between
35ft and 55ft is dominated by yards
supplying cheap boats to the charter
market. The market for high quality
yachts is small by comparison. We
have been able to position ourselves
very well in the latter.”
Niels Jeppesen, founder and
design director, X-Yachts‘Groupe Beneteau
has increased its
revenue targets
to t1.5 billion’
Volume builder Bavaria (left) has
had difficulties, but Beneteau
continues to invest in new models
such as the Oceanis 51.1 (below)Bavaria Yachts Gilles Martin-Raget