Venture Capital – ICG targets Italian e-commerce

Internet Capital Group (ICG) in March unveiled a joint venture with Enel, Italy’s leading electricity company, which aims to address business-to-business e-commerce opportunities in Italy and the wider European market.

Nasdaq-listed ICG committed to the European market last autumn, attracting Matthias Allgaier and Stephen Duckett of Apax to head its London- and Munich-based operations. The group intends to devote a significant proportion of the $1.6 billion ( e1.65 billion) it raised in a recent secondary rights offering to Internet opportunities in Europe.

Under the terms of the agreement, Enel will take a $25 million stake in ICG and its CEO, Franco Tato, will take a seat on ICG’s European advisory board. The Italian joint venture will be capitalised at $10 million, split equally between the two strategic partners. The structure was still subject to regulatory approval at press time.

The Italian venture allies ICG’s experience in business-to-business e-commerce investment with Enel’s exceptional penetration of the Italian industrial market. The largest quoted electricity utility in the world, Enel has a customer base of 29 million. The joint venture will focus on opportunities in the water, electricity and gas segments of the European utilities market and will also target segments of the vibrant Italian telecommunications sector. (Enel is already active in the telecommunications market, owning a 51 per cent holding in WIND, a commercial telephony joint venture with Deutsche Telekom and France Telecom).

ICG has a portfolio of holdings in more than 55 e-commerce companies, which it prefers to characterise as partners’ rather than investees. The firm provides a high degree of hands-on operational support as well as capital, and leverages its strategic network of business relationships to maximise the potential of its partners.

Around one fifth of its partner companies are based in Europe. They include Eu-Supply, a construction industry exchange; VerticalNet Europe, the service for online trading communities; PaperExchange.com; and, as the latest addition to the European portfolio, FOL (formerly Farming On-line), a portal for the agricultural industry.

Following its strategic alliance with Enel, ICG expects to complete a number of other European joint ventures in the near future. The firm is also aiming to extend its activities into Asian markets and, to this end, has linked with Hutchison Whampoa to form two business-to-business e-commerce joint ventures. One, ICG AsiaWorks, will act as an incubator for e-commerce market makers. The other will be an e-procurement services company with the ambition to establish itself as the definitive neutral business-to-business buying and selling portal in Asia.