MILAN, Oct 12, 2015:
Milan-listed shares in Fiat Chrysler Automobiles rose around 2% on Monday after it started an initial public offering for Ferrari that could give the luxury sportscar maker a market capitalisation of up to US$9.8 billion.
FCA said it would sell up to 10% of Ferrari in the IPO at a price of between US$48 and US$52 per share and use the proceeds to help pay for its own ambitious 48 billion euro turnaround plan centred around the revamp of the Alfa Romeo, Maserati and Jeep brands.
In a prospectus filed late on Friday, Ferrari said it would inherit just over 2 billion euros of net debt as part of the separation from FCA, which would bring the luxury group’s enterprise value to around 10.6 billion euros (US$12.1 billion).
This is in line with expectations of FCA Chief Executive Sergio Marchionne who has long said Ferrari was worth at least 10 billion euros, deserving the high-flying multiples of other luxury firms.
By 0900 GMT, FCA shares were up 1.8 percent at 14.07 euros, outperforming a roughly flat Milan blue-chip index.
While analysts agree that the valuation reflects Ferrari’s rarity and strong brand appeal, helped by the small size of the offering, they remained cautious about the strength of the company’s fundamentals when compared with other auto stocks.
“Longer-term, we question whether it really has better unit growth potential than a company like BMW… Ferrari is clearly also less diversified than the Munich company,” Arndt Ellinghorst, an analyst at Evercore ISI said in a note.
Ferrari will debut on Wall Street this month and be spun off from FCA next year, when the parent will also distribute the rest of its stake in the company to its own shareholders.
FCA owns 90% of Ferrari, with the remainder in the hands of Piero Ferrari, vice-chairman and son of the founder Enzo, who died in 1988.