A Chinese firm's takeover of the world's leading luxury yacht maker Ferretti announced Tuesday highlights Asia's fast-growing taste for elegant opulence in contrast to crisis-stricken Western markets.
Sleekly tailored with gleaming chrome accessories and luxurious saloons, the Ferretti Group designs some of the most exclusive yachts in the nautical world, snapped up by the likes of US rapper P. Diddy and actress Jennifer Lopez.
But while the hip hop star splashed out a rumoured $8.3 million (6.4 million euros) for his Ferretti 94, complete with rooftop hot-tub, VIP staterooms and Jacuzzis, the global super-rich have been more cautious in general and the brand was hit hard.
As orders for its flybridge motor yachts dropped off, the debt-laden company, which also owns the Pershing, Itama, Riva, and Bertram brands, has looked increasingly to Asia's booming appetite for luxury goods.
Shandong Heavy Industry has agreed to pay 374 million euros ($477 million) for a 75 percent stake in the company -- but Ferretti, which employs 2,000 people, will keep its management, headquarters and production bases in Italy.
Demand for luxury yachts in China is growing, and with a million millionaires in the country according to the May 2011 Hurun Report of wealthy Chinese, the nation's new rich are looking for new ways to flaunt their assets.
The country's moguls have developed a taste for Italian luxury, from Prada bags to Ferrari cars, and Chinese buyers increasingly fill front row seats at Milan's fashion week, but the number who own yachts is still relatively low.
The number of luxury powerboats and yachts in China is expected to increase by more than 10-fold to over 10,000 by 2015, Zheng Weihang, secretary general of the China Cruise and Yacht Industry Association, said earlier.
Shandong Heavy Industry, which makes commercial vehicles, construction machinery and other heavy-duty industrial products, believes Ferretti offers the company "strong strategic values," chairman Tan Xuguang said.
"Developing the yacht business is one of the group's strategic goals for the next five years," Tan said, adding that Ferretti may be listed in Hong Kong within five years of the deal.
Ferretti chairman Norberto Ferretti said he welcomed the recapitalisation deal, which would provide the company with 178 million euros in equity investment and 196 million euros in debt financing.
"We are strongly convinced that this partnership will lead to very satisfactory results and will provide Ferretti Group with a strong capital base that will allow the development of long-term growth plans," Ferretti said.
As part of the deal, Royal Bank of Scotland (RBS) and Strategic Value Partners will each become owners of a 12.5 percent stake in the yachtmaker.
Ferretti was forced to cede control to lenders in 2009 when it missed a loan payment on a debt and the crisis shrank its customer base.
In the 2009 debt-restructuring, a group of creditors led by RBS agreed to convert some of their debt to equity to avert a Ferretti bankruptcy.
But the deal announced on Tuesday has raised hackles in Italy as critics complained prized artisanship was being sold off for profit.
"Made in Italy Bye Bye!" read the headline of an editorial in Il Sole 24 Ore financial daily, which proclaimed that "another bit of Made in Italy leaves".
Yacht owners are also up in arms over Prime Minister Mario Monti's new tax on luxury boats, which critics say fails to discriminate between local and foreign-flagged vessels and ignores the industry's economic benefits.
While the debt crisis deepens and elegant fibre-glass maxi yachts risk disappearing from idyllic berthing spots along the Amalfi coast, luxury yacht makers are launching branches in Asia and shifting marketing strategies to the continent.
Last year saw the launch of the Asia-Pacific Superyacht Association in Hong Kong and Britain's Pearl Motor Yachts opened its first dealership in the city.
Several major European luxury yachting brands are also planning to launch new models at the Phuket International Boat Show (PIMEX) in Thailand in March.