Ferrari Looking For $12.4-B Valuation In NYSE IPO
$FRRI
Ferrari’s iconic status as a maker of supercars for superrich is helping drive up its value in a IPO (initial public offering) to $12.4-B, according to talk on The Street this early Friday morning.
Based on talks potential investors, Ferrari could be valued at EUR 11-B when owner Fiat Chrysler Automobiles NV (NYSE:FCAU) sells a 10% stake in the unit on the New York Stock Exchange some time after Monday, 12 October.
An IPO price range will be published in an updated filing Friday, and presentations to possible buyers are slated for next week. The valuation should not change due to Volkswagen AG’s (OTCMKT:VLKAY) scandal.
Fiat Chrysler CEO Sergio Marchionne, who is also Ferrari Chairman insists that the World’s #1 brand should be valued as a luxury-goods maker, and not as an auto manufacturer. Those companies trade at over 20X operating profit, more than 2X the average valuation of automakers.
A luxury multiple is justified because of Ferrari’s capital intensity, profit margins at scaled unit production, operating leverage, demand and pricing ability.
Ferrari could be valued as high as 14X expected Y 2015 EBITDA (earnings before interest, taxes, depreciation and amortization).
Ferrari will be listed in New York under the ticker “FRRI” posted adjusted EBITDA last year of EUR 693-M after generating a margin of 25% of sales. Profit rose 8.9% in 1-H of Y 2015.
Ferrari makes a point of restricting sales to preserve its models’ high-end reputation, is set to push the boundaries of its exclusivity with plans to increase production of cars such as the EUR 235,000 newly introduced 488 Spider to 9,000 cars in Y 2019 from about 7,200 cars last year, according to a 22 September SEC filing. The carmaker had previously set its limit at about 7,000 cars a year.
“Ferrari is a legend” because of the value of the brand and its track record on profitability, said Lapo Elkann who, along with his brother, Fiat Chairman John Elkann, is part of the Agnelli family that controls the auto manufacturer. At Ferrari, “you do not sell a car, you sell a dream,” he said in an interview in Milan.
UBS Group AG, Bank of America Corp.’s Merrill Lynch, Banco Santander SA, Mediobanca SpA and JPMorgan Chase & Co. are advising on the IPO.
Stay tuned…
Paul Ebeling
HeffX-LTN
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