The vroom without fumes

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GMI

(Filed: 12/06/2005)

Carlo Di Biagio is offering British investors a stake in a 'no income' company that plans to sell a revolutionary, environmentally friendly, battery-powered motorbike. Martin Baker discovers that it's a long way from his background making cheese and salami and from his later stint as boss of Ducati

Apparently it's perfectly possible to get a speed thrill from -battery-operated equipment. And Carlo Di Biagio wants us all to have it on the way to work.

Click to enlarge

Di Biagio is the chief operating officer - soon to be the chief executive - of Vectrix, a company that has designed, patented and is in the process of manufacturing and marketing a battery-operated vehicle that looks like a cross between a scooter and a motorbike.

In terms of road performance, most electrically powered vehicles rank with milk carts with chronic asthma and a club foot. But the launch of the new Maxi-Scooter, for which Vectrix is seeking £30m by floating about 60 per cent of its shares on Aim on June 23, is something that really does get Di Biagio flying.

The Maxi is emission-free, a unique selling point, but Di Biagio doesn't really care.

"The European attitude to the environment changes as you go north. It's important in northern Europe. In the south of Italy environmental consciousness is zero," he says. "But I was captivated by the performance of this bike. That's what will sell it there. It has the riding experience and the acceleration of an 800cc machine. It's like being launched into space.

"It's a revolution in bike travel," enthuses the Italian, who commutes into Vectrix's Rome office on a bike manufactured by Ducati, a company of which he was formerly chief executive. "There is no pollution and it handles like a big bike. It satisfies your riding needs. It's truly unique."

Sceptics say there's a problem with all this environmentally friendly zappiness. The battery runs down quite quickly - and when was the last time you saw a power point on the central reservation of the motorway?

But the sceptics are raising the wrong objections, according to Di Biagio. "Scooters are very much used for commuting, and it's that market that we're in," he says. Few European commuters travel further than 30km, and the "bike lasts easily 80 minutes". According to the prospectus, it recharges a totally flat battery in two-and-a-half hours.

We meet for breakfast, and ahead of Di Biagio lies a whole day of telling City analysts everything they ever wanted to know about scooters - and possibly a little bit more. Apparently, 35 per cent of two-wheeled motor vehicles in the UK are mopeds of less than 50cc. Some 35 per cent of the two-wheeled market is motorbikes, and the scooter accounts for 30 per cent. And the UK market is relatively immature: 500,000 two-wheelers go into Rome every day, against 35,000 into London.

Vectrix is quite an international operation. The vehicle was designed in the company's Rhode Island offices by Andrew MacGowan, its chairman and founder, a vigorous American who helped to develop the stealth fighter when he was at Lockheed Martin. MacGowan had intended to come to our breakfast meeting, but cried off being probed by the media and the City on the grounds of exhaustion, preferring to remain in the US and, erm, recharge his batteries. The Maxi will be manufactured in Poland and a subsidiary is being opened in Ireland. So why on earth is the company seeking to raise capital in London?

Di Biagio argues that there are a lot of machines to be sold here and that the City understands the type of company that Vectrix is.

In the US and Italy, the locals either fail to understand the company or haven't got a clue what its product is, making London the logical choice. "The appetite for no--income companies in Italy is wholly undeveloped, unlike London. And the scooter business really doesn't exist in the US," he says. "In the UK the scooter market is growing fantastically - it was up 26 per cent by unit sales last year. It's a function of more traffic and congestion on the roads and public transport becoming more unpopular."

The company, which Di Biagio has been with for almost two years, is owned by 175 shareholders who have been funding the project for eight years. "Half of them are high net worth individuals. The first seven shareholders funded 50 per cent of the $33m [£18m] total investment."

A major partner in the venture is the Parker-Hannifin corporation, which manufactures motion and control technology systems. Numis Securities, the broker, is advising on the flotation.

In business terms, it's a remarkable story. Very few companies see a bright idea become a prototype and then produce and mass-market that product all on their own. The cash raised at the end of the month is going to go into financing a factory and a couple of Vectrix shops, one in Rome and one in London.

Di Biagio came to the venture relatively late in the day, joining just under two years ago from a consulting role with Ducati, having stepped aside as chief executive. But he was a warm-starter, having seen an early model while still in the boss's chair.

"Vectrix brought along a prototype without farings. I tested it myself on Ducati's racetrack. It was very strong."

He certainly doesn't strike one as a biker - but that's probably a British prejudice. As his market research indicates, the Italians are far more prone to scooting around on two wheels than we Brits are.

A naturally phlegmatic fellow, Di Biagio comes alive when he talks of the Maxi project. The dark eyes beneath the hedgehog eyebrows fairly dance when he outlines what he sees as "a unique opportunity to create a brand".

Di Biagio will become chief executive for the third time in his career after the flotation, having become something of a niche player in the two-wheeler world.

He took the quiet man's route to business prominence. The son of a Roman food store owner ("My father sold cheese, salami. He worked very hard, even on Sundays"), Di Biagio excelled as a scholar, graduating early - at 22 as opposed to the usual age of 24 - and with distinction from La Sapienza university in Rome.

His name at the top of the academic roll of students of commerce attracted a phone call from Procter & Gamble. With a good head for numbers, he quickly took charge of the treasury control function of the company; foreign exchange was an especially important area in the days before the euro. He rose to become the chief financial officer of P&G in Italy, and was promoted to a big European job, based in Brussels.

"I hated it. I didn't like Brussels and being disconnected from what we were actually producing. I liked to see how much we'd sold each day." He had a brief flirtation with doing what his father did, except on a much grander scale, as chief executive of Fiorucci, a cheese and salami producer.

In 1997 he was headhunted by Ducati to be chief financial officer, and was a part of the flotation that garnered $230m in March 1999. He then engineered a successful $100m bond issue and became chief executive. The line was that Ducati was going to be the new Harley Davidson - but it didn't turn out like that, and Di Biagio was taking a back seat and consulting when the Vectrix opportunity came along.

So now he has a unique product and a detailed plan to sell it in his favoured markets across Europe. The objective is to sell 6,000 machines in the first year of production.

They will be priced at about £5,500, and there are good tax breaks for such machines in Italy, apparently. But, as analysts are well aware, success is all about the machine. Is this really a better mousetrap or a latter day Sinclair C5? Time for a market test drive.