Ferrari set for October IPO to fund expansion

Ferrari NV filed papers on Friday for an initial public offering (IPO) in the United States, which could be launched as early as mid-October, and could value the luxury car maker at $9.82 billion. The shares will be traded on the New York Stock Exchange under the symbol RACE, according to a filing with the US Securities and Exchange Commission.

The move is part of the parent company Fiat Chrysler Automobiles NV chief executive Sergio Marchionne's efforts to reduce debts on Fiat Chrysler's books and to fund a €48 billion ($54.5 billion) expansion plan, focusing mainly on enhancing Jeep, Alfa Romeo and Maserati on a global level.

The sale of the 17.2 million shares by the Dutch holding company Ferrari, 90 per cent of which is owned by Fiat Chrysler, is valued between $48 and $52 a share. The stock is expected to be traded from 21 October.

Fiat Chrysler had increased its 50-per cent stake in Ferrari after the death of founder Enzo Ferrari in 1988. His son, Piero Ferrari, currently holds the remaining 10 per cent and plans to retain it after the IPO. Piero will also receive €280 million in cash after the separation of Ferrari from Fiat Chrysler.

Fiat Chrysler will sell roughly a 9-per cent stake in Ferrari through the IPO, and plans to distribute the remaining 80 per cent it owns to its shareholders by 2016, according to the filing.

The separation is expected to be completed by early next year. Ferrari will undertake a debt of €2.8 billion from the company and issue a projected debt of €2.128 billion to third parties. Ferrari will have an enterprise value of nearly $12 billion, including the debt.

The news of the IPO, which was announced last year by Marchionne, who is also the CEO of Ferrari, led a rally in Fiat Chrysler stocks that increased 76 per cent in the past year.

The Ferrari stock is expected to be oversubscribed and initial requests for its shares are likely to exceed the amount available by 10 times, Bloomberg reported, citing a person familiar with the matter.

Ferrari delivered 7,255 of its supercars last year, with €389 million as its earnings before interest and taxes. It generated €2.8 billion euros in revenue last year, an increase of 18 per cent from 2013. The Italy-based manufacturer reportedly said in the filing Friday that it expects to report revenue of about €720-730 million for the quarter ended 30 September.