Ferrari NV, the inimitable Italian luxury sports automaker, garnered a rich US$10 billion valuation on Wall Street on Tuesday as its initial public offering went out at US$52 a share.
The share sale by parent Fiat Chrysler Automobiles NV came in at the high end of its predicted range, demonstrating substantial enthusiasm by investors and an endorsement of Fiat Chrysler chief executive Sergio Marchionne’s plan to bring the legendary mark of the prancing horse to the US market.
Underwriters offered 17.2 million shares of Ferrari, comprising about 9 percent of the company, according to banking sources. Fiat Chrysler had expected to price the offering at between US$48 and US$52 per share.
Photo: AP
Ferrari shipped 7,255 new cars to its wealthy customers last year and the prospectus envisages only a gradual expansion to about 9,000 per year by 2019.
“We believe our cars are the epitome of performance, luxury and styling,” it said. “We intend to maintain and extend our leading position in the luxury performance sports car market and to continue to protect and enhance the value and exclusivity of the Ferrari brand and its association with the lifestyle we believe it represents.”
As a unit of Fiat Chrysler, the supercar maker has been a cash generator. Last year it reported net revenues of 2.76 billion euros (US$3.13 billion), and a net profit of 265 million euros. Revenues grew 7 percent per year between 2005 and last year, and margins increased strongly over the same period.
Fiat Chrysler owns about 90 percent of Ferrari and, with a high debt level, could benefit from raising cash in the sale.
At the end of June, the carmaker had net debt of US$10.8 billion due to a combination of the costs of the Chrysler takeover and ongoing loss making activities in Europe.
Now Fiat Chrysler plans to invest about US$48 billion to expand its total worldwide sales to 7 million vehicles per year, largely through the development of its Jeep, Alfa Romeo and Maserati brands.
The flotation is not expected to have any significant impact on Ferrari’s involvement in Formula One, in which it is re-emerging as a force after enduring a lean period in the slipstream of world champion Lewis Hamilton’s Mercedes team.
Ferrari’s status as the longest- established and most celebrated team in Formula One is vital to the value of its brand.
It also accounts for more than 10 percent of its revenue through sponsorship and related commercial agreements, including licensing of the company’s name and its famed logo in sportswear, watches, accessories, consumer electronics and theme parks.
The listing will leave Fiat Chrysler with 80 to 81 percent of Ferrari which the parent company intends to distribute to its own shareholders next year.
Piero Ferrari, a son of legendary founder Enzo Ferrari, will retain a 10 percent stake after the flotation.
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