Investment report December 2025 - View into the portfolio

Rino Mastrotto – The secret behind Prada

Rino Mastrotto, headquartered in Vicenza (Italy), is the leading manufacturer of leather for the global luxury industry. The company generates over 52% of its revenue with leather for handbags and shoes. A further 30% comes from the automotive industry and 18% from interior design. Overall, leather products account for over 90% of revenue. 

One of its great strengths is the combination of the highest quality, logistics and service. As a result, the company has a customer retention rate of 99%. Its main customers include iconic luxury brands such as Hermès, LVMH and Prada, as well as up-and-coming brands such as Poléne. In the automotive sector, Ferrari is a major customer. An important competitive advantage is vertical integration. Unlike many competitors, Rino has direct access to slaughterhouses. The preliminary products are further processed in Rino's tanneries using its own logistics. The management, under CEO Matteo Mastrotto, attaches particular importance to always having enough leather material in stock for customers. This is not economical from a financial point of view, but it creates loyalty among the big names in the industry. Rino's flexibility creates customer loyalty. Prada has also recognised Rino Mastrotto's unique position in the global value chain for luxury leather. The luxury group secured a 10% stake in spring 2025 to guarantee supply chain security. In the event of financial difficulties, we are convinced that the €13 billion Prada Group would support Rino Mastrotto in order not to destabilise the supply chain. In return, Prada has contributed two tanneries. We consider this strategic stake by Prada to be an inherent event component. Should Rino Mastrotto encounter difficulties contrary to our expectations, we see a high chance that we will benefit from a "Prada put".

We were able to acquire the bond at an average yield of 8.0%. The bond has come under pressure since Trump's "Liberation Day" and its impact on the global luxury and automotive markets. 

The company is close to its operational trough and may well have already passed it. Rino cur-rently generates €56 million in operating profitability and can generate €7 million in free cash flow from this. This means that even at a low level, enough money is being earned to serve all stakeholders. Within the next two years, we expect a significant increase in profitability to more than €70 million. This should double the free cash flow available. Debt coverage is comfortable at around 65% based on conservative assumptions. We consider the current difficulties to be an extremely attractive opportunity to build a substantial position in an attractive business model that is deeply embedded in its value chain.

Yours sincerely

Johannes Hesche             Tobias Engl