Ferrari S.p.A's parent company, Fiat Chrysler Automobiles or FCA is selling 10 percent of its shares at the New York Stock Exchange in an initial public offering. This move will make Fiat Chrysler own only about 80 percent of the company.
In a report by the Khaleej Times, founder Enzo Ferrari's son, Piero, will own the remaining shares. As reported, the Ferrari IPO will serve as a milestone deal for Fiat Chrysler chairman Sergio Marchionne. In addition, the $10 billion post-IPO valuation for the Italian luxury car maker will only affect the value of its shares in Milan as well as its stakes in Maserati and Alfa Romeo.
According to Bloomberg Business, Marchionne has said that Ferrari should be valued as a luxury-goods maker like Prada or Hermes, instead of just an auto manufacturer. Those luxury-good brands are reported to be trading over 20 times of earnings, which is more than twice the average valuation of car makers.
However, analysts have questioned Marchionne's idea on whether the capital intensive business deserves the multiples received by the likes of Prada and Hermes.
As noted, Ferrari is still working out the details of its debut on the NY Stock Exchange in the second half of October.
In a similar report by CNBC News, the Italian luxury car maker expects its price range to be $48 to $52 per share. And as noted, proceeds of the sold shares will be used to fund a price turnaround plan that will help boost global sales to 7 million cars by 2018, therefore helping Ferrari compete with rivals like BMW and Volkswagen.
According to the report, Ferrari expects to list on the New York Stock Exchange under the symbol "RACE" when it makes its Wall Street debut in the second half of October.
In addition, Ferrari will include a loyalty share scheme for long-term investors that is seen as a move to tighten the grip on the company by Fiat's founding family, The Agnelli. This in turn will prevent any unwanted takeover bid.
