friday, 24 july of 2015

Ferrari files for New York IPO

Ferrari has filed for an initial public offering, nine months after Fiat Chrysler Automobiles announced the spin-off of its cherished supercar marque.

In a note to the US Securities and Exchange Commission on Thursday, Fiat Chrysler said it would list the subsidiary, which will be known as Ferrari NV, in New York.

The spin-off forms part of chief executive’s Sergio Marchionne’s plan to bring down its €8.6bn of net debt while funding an ambitious €48bn investment plan at the Italian-American carmaker.

The move also means that any merger or acquisition involving Fiat Chrysler would be simpler to carry out following the separation. Mr Marchionne has been vocal in calling for consolidation in the car industry.

The listing also includes a loyalty share scheme giving long-term investors greater voting power. That means Exor — the investment company of the Fiat founding family and Fiat Chrysler’s largest shareholder — and Piero Ferrari, son of the founder, will hold more than 45 per cent of Ferrari’s voting shares following the separation.

“They are doing two things: separate the company from Fiat and keep a tight grip on Ferrari for Exor — and they get some money out of it,” said Pierluigi Bellini, analyst at IHS Automotive.

Mr Marchionne unveiled plans to carve out Ferrari in October.

In the intervening period, the process has been complicated by a delay over a tax ruling, which meant the carmaker would have to wait at least a year from the joint listing of Fiat and Chrysler — which was also in October — to book any gain from selling shares in Ferrari.

Mr Marchionne had initially said the listing would happen by mid-2015.

Under the plan, 10 per cent of the “prancing horse” marque will be listed, and a further 80 per cent of the shares distributed among Fiat Chrysler’s existing shareholders. The final 10 per cent is held by Piero Ferrari, son of the founder Enzo Ferrari.

There has been much speculation over valuation. Mr Marchionne has said Ferrari is worth “at least” €10bn — more than half the parent company’s market capitalisation of $20bn as of Thursday.

Mr Marchionne has also said the company should be judged as a maker of luxury goods, which trade on much higher stock market multiples than carmakers. Though not all analysts have agreed with him, the scarcity of shares should help boost Ferrari’s valuation, said Mr Bellini.

UBS, a long-time adviser to Fiat Chrysler, is global co-ordinator of the listing, as well as joint bookrunner alongside Bank of America Merrill Lynch and Santander.*

Ferrari, like Fiat Chrysler and sister company CNH Industrial, will be registered in the Netherlands. However, Ferrari will maintain its Italian tax domicile, soothing political concerns in its home country that it would follow the larger two companies to the UK.

Fiat Chrysler wants to complete the separation of Ferrari by early 2016. The Maranello-based supercar maker had first-quarter sales of €621m and net income of €65m.

Ferrari has long capped annual production at 7,000 units to maintain the exclusivity of its vehicles. But, according to the filing, it is targeting shipments of 9,000 by 2019.

(Published by Financial Times - July 23, 2015)

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