European IPO’s and spinoffs: Ferrari revs up

Clearly the highest profile IPO is Ferrari which is being spun out from its Italian owner Fiat.  This could take place in the next few weeks but the company is being listed in New York rather than Europe.

As a premium carmaker Ferrari is attractive given that it is less exposed to price competition.  Only 10% of the shares are up for sale in the IPO while Fiat shareholders will get the remaining 80% with Piero Ferrari maintaining his 10%.

A potential way to gain exposure to Ferrari, then, is to buy into Fiat Chrysler which is listed in Italy under the FCA ticker.  The company is also listed in New York under the FCAU ticker.

Ferrari makes only around 7,000 cars per year as part of a strategy to maintain the exclusivity of the brand.  However, emerging market demand could see production rise to 10,000 units per year in the medium-term.

Ferrari expects to release a new model every year from now until 2018 with the focus on the driving experience rather than car performance.  Ferrari saw EBIT of US$389 in 2014 on revenue of US$2.76bn giving a robust 14% EBIT margin.

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