Sergio Marchionne, CEO of Fiat Chrysler Automobiles (FCA) group managed to spin off successfully 10 percent of Ferrari shares at the New York Stock Exchange last month.
Shares in Ferrari, trading under the ticker RACE climbed by 15 percent in early trading, valuing the company at $10.7 billion.
Based on earnings last year of 693 euros, the float priced Ferrari on a multiple of about 14 times its earnings before tax. That puts it in the same league as luxury brands such as Prada and Hermes and well about the 3.5 multiples of BMW.
The IPO success was due to a number of factors: the shrewd limited supply of shares at 10 percent only; the fact that the company is profitable and the merchandise side of the company which brings in additional income.
Ferrari will open a second Ferrari World in Spain next year after the first successful Ferrari World in Abu Dhabi which was opened in 2010.
The company is planning to produce 9,000 cars by 2019, up from 7,253 cars last year.
However, it is not going to be plain sailing for the Ferrari shares as one analyst said: “This is a low growth modest returns business with massive technology costs and complex regulatory challenges.”
Speculation that Aston Martin is following the Ferrari float closely in order to follow suit may be over ambitious.
Aston Martin needs to put its house in order before going to the market.
It is still a loss-making company and its losses last year were triple that of 2013.
A float for Aston Martin in the future could be feasible after a re-structure that aims at achieving profits and potential for expansion.
But even then the best valuation for the company would be modest and up three or four times its earnings.
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*Adel Murad is a senior motoring and business journalist, based in London.
Email: [email protected]
