The Ferrari IPO has caused an intense debate for many months and it is awaited by several investors and enthusiastic fans who are dreaming about owning shares. Almost a year has passed since the CEO Sergio Marchionne announced that he would be conducting an initial public offering of the most influential car brand in the world. However, the most recent rumours suggest that an initial public offering is imminent and by placing the NYSE quotation side by side there would be a secondary quotation at Milan stock exchange, most likely in 2016.
The joint bookrunners will be UBS, Merrill Lynch and Banco Santander, while the global coordinator will be UBS alone.
What are the reasons for the IPO?
The decision of sharing the company via Wall Street could be a plan of action to revamp the brand at an international level and to attract new assets.
Fiat-Chrysler has a high debt exposure compared with the rest of the sector, therefore the IPO would help FCA finance the 48 million euros investment plan desired by Sergio Marchionne back in 2014, to increase the EBIT and above all to reinforce the financial structure. At the stock market, only 10% of the shares will be distributed free of charge to existing FCA shareholders and the remaining 10% will continue to be owned by Pietro Ferrari, the son of the founder, Enzo Ferrari. Subsequently, 80% of Ferrari will no longer be FCA property, but property of the FCA shareholders, including Exor S.p.a., the holding through which Agnelli’s family controls FCA. The latter along with Pietro Ferrari would then have complete control of the company.
But what is Ferrari’s value?
Ferrari’s evaluation after the IPO should be about 10 billion euros.
“I expect 10 billion euros at least from the IPO”
Sergio Marchionne, CEO, Ferrari
However, this latter remark is not shared by all: the valuation fluctuates between 7 and 10 billion euros, even 20 according to Luca Cordero di Montezemolo, the ex-CEO. Nonetheless everybody agrees on one point: the rampant horse cannot be evaluated as any old car brand, because Ferrari is a luxury brand and moreover one must take into consideration that shares are few and exclusive (only 10% will be sold); this could add up to an evaluation higher than what was expected. On the other hand, Ferrari’s financial debt is quite extensive and clear-cut future strategies are not on the horizon. The IPO’s performance will depend on these and other circumstances, including the market sentiment.