Now that Fiat Chrysler Automobiles (FCA) has shuffled its executive management team, the company is moving forward with its plan to take Ferrari public with an offering of more than 17 million shares. The value of the Italian automaker of exotic, sexy, 6-figure sports cars is expected to reach $9.8 billion and will be listed on the New York Stock Exchange (NYSE) under the ticker symbol, RACE.
According to the amended filing with the Securities and Exchange Commission (SEC), FCA and Ferrari have priced their offering between $48 and $52 per share, potentially raising $894 million in the IPO. Proceeds from the IPO will be fed to Ferrari; most of it will go to the parent company, Fiat Chrysler.
Fiat Chrysler has an 80 percent stake after the offering and plans to distribute the rest to FCA’s investors by 2016, according to the filing.
Ferrari’s history is rooted in racing. Enzo Ferrari started a team in 1929 called Scuderia Ferrari, but the company didn’t produce its first car until 1947. Two decades later, Fiat acquired a 50 percent stake, which increased to 90 percent after Enzo Ferrari died in 1988. His son, Piero Ferrari, holds the remaining 10 percent, which he will keep after the I.P.O.
A Ferrari IPO has been rumored for years. Last year, longtime Ferrari Chairman Luca di Montezemolo stepped down, replaced by FCA CEO Sergio Marchionne.
It was suspected that the two men had clashed over differing visions of Ferrari’s future. Montezemolo wanted to preserve Ferrari’s exclusivity and hold production at around 7,000 cars per year.
Marchionne wants to build more Ferraris, to satisfy a global demand for high-end luxury products. Ferrari, with cars that start at $200,000, definitely fits that description.
Last year Ferrari shipped 7,255 cars. This low-volume strategy helps cultivate the reputation for exclusivity, but it also limits revenue and potential for profit growth.