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Wed 27 Aug 2008 05:36 PM

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Italy's Ferretti eyes Gulf market

Yacht company teams up with German real estate firm to develop Dubai waterfront towers.

Italian luxury yacht maker Ferretti may go ahead with plans to sell shares to the public after November, but a final decision would depend on market conditions, its chief executive told Reuters on Wednesday.

Speaking in an interview at the launch of a $1.6 billion property development in Dubai that will draw on Ferretti's yacht designs, CEO Vincenzo Cannatelli said the markets remained "difficult".

"In September, we will see where the markets are ... Certainly, it cannot be before the fall because we are releasing our full-year results in October," he said, adding that November onwards could be possible.

Cannatelli declined to give a range for expected profit or revenue growth in the year ending Aug. 31, but said increased sales of mega-yachts, typically over 70 feet in length, would help make 2007-2008 a "good year", despite the global economic downturn.

"Fortunately enough (the slowdown) does not have a major impact on Ferretti, because our smallest entry level is 40 to 50 feet and what does better in this (economic) environment is the 70 feet (class)," Cannatelli said.

Rising fuel prices were unlikely to dampen Ferretti's growth as buyers willing to spend 5, 10 or 15 million euros on a luxury boat would not be deterred.

Ferretti, which owns the Riva and Pershing yacht brands, is 51-percent owned by Candover , the London-based private equity fund that bought the yacht maker from rival fund Permira in 2006. Permira still holds a 9 percent stake.

In April, the Financial Times put Ferretti's valuation as high as 3 billion euros ($4.65 billion). Cannatelli declined to give a valuation.

Ferretti went public with a listing in Milan in 2000, but Permira took it private again two years later. It sold control to Candover in 2006.

Mediobanca and Merrill Lynch are joint global coordinators for the anticipated offer, with Citi and UBS joint bookrunners.

Cannatelli said the difficulties in the US were being offset by growth in Eastern Europe and South America and new opportunities in emerging markets such as India and China.

The booming Gulf market, where a more than fivefold rise in oil prices since 2002 has buoyed economic growth, could become a "significant" market for Ferretti, Cannatelli said, adding that it currently sells dozens of boats a year in the region.

Dubai, home to manmade palm-shaped islands, plans to add 50,000 boat berths across the emirate, up from 2,500 in 2007.

In the UAE, the world's fifth-largest oil exporter, millionaires accounted for one out of every 58 people in a total population of 4.5 million last year, according to data provided in the Merrill Lynch and Capgemini World Wealth Report.

Ferretti has teamed up with German real estate firm ACI to develop waterfront apartment towers in Dubai that are named after Ferretti yachts. The buildings will house yachts moored at the development.

"Middle East (people) have always been excellent clients for the big boats and mega-yachts, but generally kept them in the Mediterranean," said Cannatelli. "What is happening is the development of real estate and marinas ... I believe it will increase the culture of boating in this region." (Reuters)

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