UBS will lead the Ferrari IPO

Bloomberg reported Tuesday that UBS will be the investment bank that leads Ferrari’s initial public offering, scheduled for October.
Bloomberg’s Tommaso Ebhardt, Ruth David, and Mark Clothier cited “people with knowledge of the matter” and added that “JPMorgan Chase & Co. and Goldman Sachs Group Inc. are also due to play a role in selling 10 percent of Ferrari’s shares to investors….”

None of the reported participants in the IPO, including the banks, Ferrari, and parent company Fiat Chrysler Automobiles, commented for the Bloomberg story.

FCA CEO Sergio Marchionne has said that the Ferrari IPO could value the exotic Italian car maker at $11 billion, which is $3-$4 billion more than many auto industry and financial market observers thought the prancing stallion would be worth in an offering.

An offering share price hasn’t been announced. The new Ferrari stock – ticker symbol yet to be created – will trade on the New York Stock Exchange.

FCA sales have been strong, benefiting from the broad recovery in the global auto industry since the financial crisis and Chrysler’s bailout and bankruptcy. A healthy appetite among consumers for the Jeep brand and pickups and SUVs has helped FCA’s cause – the company staged its own IPO last year, and shares are up substantially from the offering price of $11, peaking at $17 and lately trading around $14.

But relative to its Detroit brethren, General Motors and Chrysler, FCAU is in weaker financial shape, leading Marchionne to actively seek a merger partner ahead of the next downturn in the industry (he’s so far been rebuffed by everyone he’s approached).

Ferrari, meanwhile, is in a transitional phase. Its former longtime chairman, Luce di Montezemolo, steeped down last year amid widespread speculation that Marchionne had been pressing to increase Ferrari production, which ahs been capped at around 7,000 cars a year. It’s also adjusting its lineup of very expensive supercars to be more environmentally friendly; the new 488 GTB sports car will get a turbocharged V8 engine.

But Ferrari is also in a transitional phase to direct, rather the proxy, stock ownership. If you want a piece of the legendary car maker now, you have to buy FCA shares. And prior to the FCA IPO, you had to own Fiat.

It may be hard to afford an actual Ferrari, given that the entry level California model starts at almost $200,000. But soon, if you’ve always wanted to own Ferrari, you should be able to do so for a lot less, even if the actual car has to wait.