Ferrari NV’s initial public offering has been priced at the top of expectations on Tuesday, securing $893 million, with fans rallying next to institutional investors to access the shares in defiance of the troubled market.
Fiat Chrysler Automobiles NV, the Italian-American carmaker that controls Ferrari, made a significant effort to promote the IPO of its most iconic brand both to individual owners as well as the Wall Street peers, and also limited the offering to just 9.1 percent of the company. The strategy has proved successful and the IPO was priced in New York at $52 per share, the top end of its envisioned $48 to $52 per share range, according to sources that have knowledge of the proceeds – the IPO thus establishes a market value of about $9.8 billion. The persons reported the pricing details under condition of anonymity as they have not been released to the general public.
The money gained through the Ferrari IPO will help FCA, the third largest US automaker and the world’s seventh biggest, prop its ambitious five-year masterplan that centers around the expansion of its Alfa Romeo, Jeep and Maserati brands. The successful IPO is also a major PR boost – besides the financial aid – as the automaker’s call to arms to unite with a competitor have been completely overlooked. “The utilitarian benefits of a Ferrari are no different from those of a Toyota,” comments Meir Statman, professor of finance at Santa Clara University and author of “What Investors Really Want.” ” But Ferraris yield expressive and emotional benefits. A 70-year old in a Toyota is old, but a 70-year old in a Ferrari is young,” he added. The total benefits for FCA, after the spin off is completed are estimated at about $4.2 billion.