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Ferrari To Hold IPO, Founding Family Will Retain Stake

RMAutoBuzz

Italian supercar manufacturer Ferrari will hold an initial public offering later in 2015, when it will be spun off from current parent company Fiat-Chrysler Automobiles (FCA) to form a new standalone, publicly traded company. While the IPO is still subject to approval by regulators, FCA CEO Sergio Marchionne made crystal clear the multi-national auto conglomerate’s plan to part ways with its halo sports car brand.

Marchionne detailed a rough plan for taking Ferrari public, stating that FCA will list 10 percent of its current Ferrari holdings as new publicly available stock shares while distributing the remainder to current FCA shareholders. Ferrari’s total sales are just a small fraction of those of major automakers, but the company makes hundreds of millions of dollars annually by licensing its name and logo for use in products often unrelated to sports cars, like apparel and even laptop computers. For several years running, consultancy firm Brand Finance had ranked Ferrari number-one in the world on its list of most powerful brands, although in 2015 LEGO dethroned the automaker to take the top spot.

At least one major Ferrari shareholder has no plans to sell, though: the Ferrari family itself. Piero Ferrari, the son of company founder Enzo Ferrari, holds a 10 percent stake in the automaker, with FCA owning the remaining 90 percent. Piero Ferrari, who currently resides in Italy and heads an aerospace company, made this fact very clear to reporters with one simple statement: “I have never sold and I have no intention of doing so.”

What kind of a market capitalization value will Ferrari bring in when the company goes public, barring any unforeseen circumstances, in Fall 2015? Reports from Bloomberg Business and The Motley Fool place the company’s value at between US $7.3 billion and $13 billion, though experts acknowledge it is difficult to place value on any company considered a “sacred brand.” Ferrari’s IPO is expected to bring FCA between $600 and $700 million in asserts on day one. Part of the initial wave of stock buyers will be brand enthusiasts who purchase a small number of shares for no other reason but to feel a part of the storied automaker.

Marchionne has been accused by the media of attempting to cash in on the Ferrari name with little regard for the marque’s storied history, especially after the 2014 resignation of Luca Cordero di Montezemolo, who left Ferrari after 23 years as its top executive following public clashes with Marchionne and other FCA management.

Still, the newly christened FCA, formed through a multi-national partnership between Fiat and Chrysler, is deeply in debt and sees the cash influx that will come from a Ferrari IPO as necessary to keep its business above water. Only time will tell if the move pays off for Marchionne, and for Ferrari’s legacy.

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