Ferrari's 458 Speciale A during its debut at the Paris Motor Show last autumn.
The spin-off for Fiat Chrysler’s Ferrari brand officially got underway this morning as Fiat Chrysler Automobiles filed the regulatory papers necessary to launch the long-awaited IPO of the iconic sports car maker.
Hoping to raise some desperately needed cash for FCA’s five-year expansion plan, CEO Sergio Marchionne expects to sell off 10% of Ferrari’s shares in the initial public offering. Another 80% will be distributed to existing Fiat Chrysler shareholders. The remaining 10% is currently held by founder Enzo Ferrari’s son, Piero Lardi.
“It won’t be a difficult (sell),” Marchionne said earlier this year, reflecting the general expectation that investors will snap up the shares of Ferrari if priced properly. The CEO has said he expects the brand will be valued at around $11 billion.
“We believe our history of excellence, technological innovation and defining style transcends the automotive industry, and is the foundation of the Ferrari brand and image,” the company said in a registration statement filed with the U.S. Securities and Exchange Commission.
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The IPO will be overseen by three financial institutions: Banco Santander, Bank of America and UBS Investment Bank.
FCA Chief Sergio Marchionne expects investors to really embrace the Ferrari offering.
Newly issued Ferrari shares will be listed on the New York Stock Exchange, as are those of Fiat Chrysler. But while FCA filed the paperwork today, it won’t actually be able to launch theIPO until at least October 13th due to legal restrictions. The trans-Atlantic automaker is legally registered in the Netherlands and officially headquartered in London where regulations forbid a spin-off of assets for at least a year after the Fiat and Chrysler merger.
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Based in Maranello, Italy, Fiat was founded by Enzo Ferrari in 1947 and has built a fierce reputation both on and off the race track. It has formally limited production to just 7,200 vehicles a year and often has as much as a three-year waiting list for key product lines. Top models, such as the La Ferrari, readily go for over $1 million.
If anything, there has been intense debate over that sales cap, something that reportedly contributed to the retirement of long-time Ferrari CEO Luca di Montezemolo last year. Another factor may have been Ferrari’s recent problems on the Formula One circuit after dominating that legendary series for much of the previous decade.
Marchionne has served as chief executive at Ferrari since Montezemolo’s departure. Whether that will change after the spin-off is uncertain. But most observers anticipate that volumes will grow somewhat, though in its prospectus, Ferrari emphasized that it will continue to put a premium on “exclusivity.”
“We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation,” noted the new Ferrari prospectus.
That said, the company intends to lend its image elsewhere to build sales of Ferrari-branded items like sunglasses, watches and even laptop computers. It also may add new entertainment venues like the one it now operates in the Middle East. Ferrari World Abu Dhabi is the world’s largest indoor theme park.
The decision to launch a Ferrari IPO marks a big turnaround for Marchionne who long ruled that move out of the question. But the CEO has been under intense pressure to fund an ambitious global expansion program designed to significantly boost sales that came to 7 million worldwide last year.
Last month, FCA’s Alfa Romeo brand revealed the new Giulia sports sedan that will be one of eight new models developed at a cost of over 5 billion Euros. The parent company also is investing heavily in its other global brands, Jeep and Maserati, as well as Fiat, Chrysler, Dodge and Ram.
A successful IPO could help ease some of the pressure Marchionne says FCA faces. He has been actively calling for consolidation within the auto industry and has said he is looking for a new partner. Several competitors, notably including General Motors, have rejected Marchionne’s overtures.
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Ferrari-branded items like watches and sunglasses? Yeah…that won’t cheapen the brand or anything. Posers wearing Ferrari sunglasses will help that brand image!
They’ve been doing it for years. There’s even been some Ferrari laptop computers. Apparently hasn’t hurt them yet, nor has the sale of gold chains.
Paul E.
IMO anyone who buys these “accessories” based on a marketing association, are clearly not the sharpest tool in the shed and certainly do not impress anyone who knows anything about the brand. Porsche sells quality watches and other devices but AFAIK they don’t sell their brand name for laptop PCs – yet. Some folks will sell anything for a price but it certainly does not reflect well on the brand.