Ferrari (NYSE:RACE) IPO Will Price Tuesday, Trade Wednesday
$RACE, $FCAU, $UBS, $BAC, $JPM
After a proper roadshow the book closed Monday afternoon and Ferrari’s IPO is likely to be priced Tuesday and the 1st day of trading on the New York Stock Exchange is expected Wednesday.
Investors will be watching the stock’s initial performance, given the strong price range set for the new shares in this relatively weak IPO market. Though the word on The Jungle Telegraph this past weekend is the the shares are oversubscribed by 10X across all price ranges.
Fiat Chrysler Automobiles NV (NYSE:FCAU) is selling about 10% of Ferrari in the IPO. At the top of its projected range of 48 – 52 a share, the sports-car maker would have a market value of $9.8-B+.
That range is higher than most initial forecasts when plans for the IPO were 1st announced a year ago.
Sergio Marchionne, Chairman of Ferrari and CEO of Fiat Chrysler, has been talking up Ferrari for the past week on the roadshow that kicked off with a luncheon at New York’s St. Regis hotel, where more than 200 people filled the rooftop ballroom for the bookrunners presentation.
Ferrari’s fair value has been a point of debate among analysts and investors since the start. Right after the announcement, many analysts put Ferrari’s value at between $5 – 7-B, they thought of the iconic car maker as just a car maker, not as a luxury brand, that has changed.
Now, $5 – 7-B is counted as the value of the Ferrari brand alone, making it the world’s # 1 Brand. A luxury goods valuation at $10-B is a victory for Mr. Marchionne.
After selling about 10% of Ferrari in the IPO, Fiat Chrysler plans to distribute the other 80% it owns to its shareholders early next year. The remaining 10% of Ferrari is owned by Piero Ferrari, son of the company’s founder, Enzo Ferrari.
Following the spinoff, Italy’s Agnelli family, the largest shareholder in Fiat Chrysler, will own about a 25% of Ferrari. The family’s stake, coupled with that of Mr. Ferrari, who has said he has no plans to sell, as well as a loyalty share program, which gives longer-term shareholders extra voting rights, will protect Ferrari from unwanted suitors.
UBS Group AG is the IPO’s lead underwriter and is being helped by Bank of America Corp., Allen & Co., Banco Santander SA, BNP Paribas SA, JP Morgan Chase & Co. and Mediobanca.
Stay tuned…
HeffX-LTN
Paul Ebeling
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