By the numbers. Geodata was founded in 1984 as a start-up, growing out of Turin’s Polytechnic Institute. In the following decades, it became a world-class leader in tunnel design.
- The company has subsidiaries in 20+ countries worldwide and manages over 3,700 projects in 45 countries. To date, it has built 4,000 kilometres of underground infrastructure. It boasts 400 employees, over 500 public and private clients and essential international certifications.
- On average, Geodata grew 15% annually in its 38 years of existence. It also recorded an average turnover of €30 million (90% of which came from outside Italy) in the last three years.
Enter China. In 2017, when the company needed an industrial and financial partner to cope with the market crisis, the founder Piergiorgio Grasso accepted an offer from PowerChina, a company controlled by the Chinese government, which took over 80% of its shares.
- PowerChina is a veritable colossus, having recorded $65 billion of turnover in 2020 and controlling about 780 companies worldwide. So why did Geodata go bankrupt, even with the significant backing of PowerChina?
An unexpected shutdown. In early May, employees received an email informing them that the company had been closed down, as the Turin edition of Corriere della Sera reported.
- The majority shareholder announced its intention to withdraw and shut down operations without previously notifying the employees, who received their last salary in April and could not even apply for the redundancy fund.
- According to MF-Milano Finanza’s reconstruction, the decision seems not to have been documented nor discussed in the board or shareholder meetings.
- Reportedly, the Italian minority shareholders’ attempts to keep it going were to no avail.
What about financial health? According to the trade unions, Geodata still possessed a hefty amount of work and orders. It also accumulated considerable debts, wrote Corriere della Sera, even though it turned in €20 million in revenues and 3 million in losses in 2020.
- The nitty-gritty, according to MF: “Geodata closed 2021 with an EBITDA nearing zero and €26 million in revenues. In the first three months of 2022, it recorded 8 million in revenues, with an order backlog of €50 million and an equal number of projects waiting to be defined in detail with implementation contracts.”
Thus, Geodata could cope. MF noted “no losses on ordinary operations in the past ten months, as margins have improved slightly, while cash flows are balanced.” As for debts, “the biggest ones, amounting to some €30 million, are related to loans made by the majority shareholder.” But clearly, PowerChina thought otherwise.
Five years ago, it was all rosy. Right after the 2017 acquisition – blessed by Chinese diplomacy with the presence of Xu Xiaofeng, then minister-counsellor of the Chinese Embassy in Rome – PowerChina spoke of a win-win operation.
- Liao Yuanquing, chairman of PowerChina, told Il Sole 24 Ore that “Geodata [had become] one of the main brands of our group. We are confident for the future, the company will have a better space for development, and we aim at leadership in underground projects.”
- China Daily, a newspaper controlled by the Chinese Communist Party’s Propaganda Department, called the deal “another milestone in PowerChina’s business expansion in Europe.”
Who’s behind PowerChina? The Chinese State Council’s Assets Supervision and Administration Commission (SASAC), according to the experts at Datenna, a financial intelligence firm.
Its Wuhu branch controls one of the shareholders of EFORT Intelligent Equipment, another company strongly linked to the Beijing government. Most recently, the Italian government blocked a technology transfer deal between EFORT and ROBOX, an Italian robotics company.
Image: Michele D’Ottavio, Geodata