Ferrari kicks off $13bn IPO

Ferrari has filed papers for its long-anticipated initial public offering, setting a price range for the shares that could value the luxury carmaker at almost $US10 billion ($13.6bn).

The shares are being sold by Ferrari’s parent company, Fiat Chrysler, under the ticker symbol RACE, according to a securities filing. At the top of its projected range of $US48-$US52 a share, Ferrari would have a stockmarket value of $US9.8bn.

The deal could raise as much as $US893 million, depending on the demand it receives from potential investors over the course of a roadshow beginning next week that will span the US and Europe. The stock is expected to start trading on October 21.

Though the US listing market has slowed this year after a surge in 2014, Ferrari and its bankers are betting that the company’s reputation — especially among wealthy investors — will help it steer clear of the recent volatility that has impeded other deals.

The company has intentionally kept annual production at about 7000 cars to create a scarcity premium

Sergio Marchionne, chief executive of both Fiat Chrysler and Ferrari, first announced the IPO a year ago, setting off a rally in Fiat Chrysler shares as investors bet there was more value to be squeezed out of a Ferrari independent of its mass-market owner. Fiat Chrysler stock is up 76 per cent in the past year.

After selling about 10 per cent of Ferrari in the IPO, Fiat Chrysler plans to distribute the other 80 per cent it owns to its shareholders. The remaining 10 per cent of Ferrari is owned by Piero Ferrari, son of the company’s founder, Enzo Ferrari.

Analysts and investors have debated the value of Ferrari since Mr Marchionne announced the share sale. Some estimates have been as low as €4bn ($6.2bn). A valuation approaching $US10bn would probably be seen as a victory for Mr Marchionne.

In recent years, the company has intentionally kept annual production at about 7000 cars to create a scarcity premium by making buyers wait on average about a year before they can acquire a Ferrari. Mr Marchionne has argued that Ferrari can boost production to about 10,000 cars a year without damaging its scarcity premium — by increasing sales in markets such as China, while keeping them steady in mature markets like the US and Europe.

Ferrari generated €2.76bn in revenue last year, an increase of 18 per cent from 2013. Net income rose 11 per cent to €265m.

The carmaker said it would start shipping the new 488 Spider, introduced at the September Frankfurt Auto Show, in the fourth quarter.

UBS is the lead underwriter on the deal, alongside Bank of America, Allen & Co, Banco Santander, BNP Paribas, JPMorgan Chase and Mediobanca.

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