Ferrari plans to go public but refuses to sell out
Luxury automaker Ferrari S.p.A. is expected to have an initial public offering in 2016. Fiat Chrysler Automobiles owns Ferrari and expects to retain approximately 80 percent of the Italian sports car manufacturer. Approximately 10 percent of the remaining stock will go to Piero Ferrari with the remaining 10 percent hitting the market. Ferrari shares will be listed on the New York Stock Exchange.
Ferrari was founded in 1947 by racing driver Enzo Ferrari. The company was acquired by Fiat in 1969. In 2014, Fiat acquired American car manufacturer Chrysler and created Fiat Chrysler Automobiles.
The Ferrari name is synonymous with luxury, performance, and exclusivity within the car industry. At a minimum, the car manufacturer’s exclusivity will carry over to the availability of its stock. The average investor can indirectly invest in Ferrari by purchasing stock of Fiat Chrysler, but the 10 percent stake of Ferrari being released to the public is expected to be snatched up by large, institutional investors.
The transition to a public company will not alter Ferrari’s strategy. According to the car manufacturer’s prospectus, “While important to our current strategy, our focus on maintaining low volumes and exclusivity limits our potential sales growth and profitability.” In 2014, Ferrari only shipped 7,225 automobiles while direct competitors in the high end automobile market, Maserati and Porsche, shipped 36,500 and 120,000.
Fiat Chrysler chief executive Sergio Marchionne believes that Ferrari could be valued as high as $11 billion, although no sales price has been set yet. Marchionne said, “the intention here is to develop a business that is fully fledged on its own merits that can be compared to luxury goods-makers outside of car making.”
The Italian automaker’s initial public offering should be one of the most high profile offerings of 2016. It will come shortly after 2015’s third quarter, which the Wall Street Journal reported was the worst quarter for IPO’s in the United States since 2011. Only 34 companies went public during the quarter, down 43 percent from the same time period in 2014.
Will Ferrari be able to hold onto its strategy of exclusivity at the expense of potential profits when it becomes a public company? Feel free to leave a comment or find me on Twitter @Andrew_Morse4