Plans made last year to spin Ferrari off from parent company Fiat Chrysler Automotive (FCA) are finally underway, with the prancing horse having formally filed for an initial public offering on the New York Stock Exchange.
Following last year's Fiat Chrysler merger, it was decided to use a Ferrari flotation to generate more cash for the merged companies and long-term investment goals. At the time of the September merger, FCA CEO Sergio Marchionne called it "proper that we pursue separate paths for [Fiat Chrysler] and Ferrari", and the intervening months have been spent preparing the split.
When Fiat merged with Chrysler they took on one of the largest deficits in the automotive industry. In addition to reducing the burden of debt, Marchionne's aims for the merged entity involve a five-year investment plan just shy of €50 billion that will see boosted production levels (and hopefully an increased market share) for the other brands under the FCA umbrella: Alfa Romeo, Chrysler, Dodge, Maserati, Ram, Fiat, and Jeep. The Ferrari IPO is expected to raise €10 billion towards this goal.
While the financial boost from the IPO will smooth Marchionne's five-year plan to position FCA as an automotive behemoth, selling 7 million vehicles a year (up from 4.7 million for the unmerged companies combined in 2013), FCA and Ferrari have very different corporate goals, and some form of spin-off was inevitable.
According to the summary filing document submitted by Ferrari to the US Securities & Exchange Commission, Ferrari aims to maintain its exclusivity through limited production. "We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation," it read.
But the Italian company also has aspirations in the wider luxury and lifestyle markets: "as a standalone company with an iconic brand name, we will be better positioned to promote and extend the value of our brand, maintain our heritage, attract and reward technical and management talent and further enhance Ferrari's position among the world's premier luxury lifestyle companies".
Areas for brand expansion listed in the prospectus include sportswear, theme parks, consumer electronics, and lifestyle accessories. Merchandise sales and licensing to partners like Oakley or Puma have long represented a slice of Ferrari's profits, and by expanding into other lifestyle categories the firm will be able to expand their money-making opportunities without sacrificing the exclusivity that keeps the cars so desirable.
The earliest the IPO will be able to take place is October 2015, one year after Fiat Chrysler launched its own offering, and the aim is to make 10% of the shares available to the public, with 80% distributed between Ferrari's current shareholders, and the remaining 10 allocated to the Ferrari family.