On September 16th, Ferretti Group’s CEO Alberto Galassi announced that the Italian yachts were ready to sail again the Italian stock market sea, 16 years after the delisting. The group said that it aimed at raising more than 100mln euros without giving precise details about the size of its total offer.
After its first IPO in 2000, Ferretti was delisted in 2003 and bought by the Chinese holding Weichai Group. Weichai has a stake of around 80% and Piero Ferrari (the son of the founder of the most famous sports car maker Enzo) has a minority shareholding. Before the takeover, the company struggled in €600mln of debt. Thanks to the Chinese money inflows, it was able to reduce its indebtedness and to achieve +7.5% in revenues (€669mln in 2018), +30% in net income (€31mln in 2018) and to hire more than 600 employees in 2 years. Following this great success, the management planned to list the company again, hoping to raise more funds for the implementation of M&A activities and the subsequent PMIs following many acquisitions made by Ferretti in the last few years.
For its public listing plans, Ferretti was advised by Barclays, BNP Paribas, Mediobanca and UBS from the financial standpoint, while The Boston Consulting Group provided advice from a managerial and strategical point of view. It was exactly at BCG’s Milan office that the company held a press conference to announce its IPO to the public.
Everything seemed to be going well and the offer should have been concluded by the end of October, until something unexpected happened. During the first week of October, the managers released a public note clearly saying that they had to postpone the IPO due to some “technical” issues. Many newspapers tried to analyze what was the reason behind this announcement and they concluded that everything was related to a low demand for Ferretti’s shares. This led to the opinion that the delay was announced since the company was hoping in the strong demand from Asian investors to save the IPO.
On October 16, Bloomberg released an article explaining that in order to attract more investors the company had lowered its offering price range to €2-2.5, from €2.5-3.7.
For the second time in a week, the company extended the book building period, during which all the potential investors put in orders for an IPO. By doing it the company aimed at increasing the number of investors, since a big portion of demand was coming from non-institutional investors. About 60% of the whole demand for shares stemmed from the top 5 IPO investors. For the remaining 40% there were many difficulties in finding new people willing to invest their fund in the luxury yacht industry.
The new 2 euro-a-share valuation corresponded to a market value of 581 million euros, while the target of the management was to value the company 1.1 billion euros in market value.
It was for this reason that on October 18th, Ferretti’s CEO officially announced the retirement of the IPO project, explaining that the current shareholders were not happy with the valuation of the Company and that they preferred to pursue a simpler private placement among the investors who showed interest in acquiring a stake in the firm.
Ferretti’s IPO cancellation was the fourth in Europe during October, with Kazakhstan’s Kaspi.kz postponing its listing on London Stock Exchange and Germany’s Domicil Real Estate and Logistrial pulling their deals, earlier during the month.
It is common opinion among the analysts and experts of the European market that the cancellation of Ferretti’s IPO has capped a dismal European season for stock market listings, with cautious optimism evaporating amid global trade tensions and Brexit angst.
It is clear that 2019 has been a challenging year for the European IPO market, with investor sentiment battered by expectations of an economic slowdown as Brexit and the U.S.-China trade war (looks more like a soap-opera though) took their toll during the course of the year.
In an article published on Reuters, earlier in November, Christoph Stanger, co-head of equity capital markets at Goldman Sachs, said that “The markets are extremely volatile beneath the surface of stock index peaks. Investors are looking for growth or secure assets with stability and sufficient size and liquidity,” saying that investors are very selective as a result.
This showed how uncertainty in the political environment in advanced economies such as the English, Chinese and American ones can lead to potential disasters for their markets.
Alessandro Liori
After its first IPO in 2000, Ferretti was delisted in 2003 and bought by the Chinese holding Weichai Group. Weichai has a stake of around 80% and Piero Ferrari (the son of the founder of the most famous sports car maker Enzo) has a minority shareholding. Before the takeover, the company struggled in €600mln of debt. Thanks to the Chinese money inflows, it was able to reduce its indebtedness and to achieve +7.5% in revenues (€669mln in 2018), +30% in net income (€31mln in 2018) and to hire more than 600 employees in 2 years. Following this great success, the management planned to list the company again, hoping to raise more funds for the implementation of M&A activities and the subsequent PMIs following many acquisitions made by Ferretti in the last few years.
For its public listing plans, Ferretti was advised by Barclays, BNP Paribas, Mediobanca and UBS from the financial standpoint, while The Boston Consulting Group provided advice from a managerial and strategical point of view. It was exactly at BCG’s Milan office that the company held a press conference to announce its IPO to the public.
Everything seemed to be going well and the offer should have been concluded by the end of October, until something unexpected happened. During the first week of October, the managers released a public note clearly saying that they had to postpone the IPO due to some “technical” issues. Many newspapers tried to analyze what was the reason behind this announcement and they concluded that everything was related to a low demand for Ferretti’s shares. This led to the opinion that the delay was announced since the company was hoping in the strong demand from Asian investors to save the IPO.
On October 16, Bloomberg released an article explaining that in order to attract more investors the company had lowered its offering price range to €2-2.5, from €2.5-3.7.
For the second time in a week, the company extended the book building period, during which all the potential investors put in orders for an IPO. By doing it the company aimed at increasing the number of investors, since a big portion of demand was coming from non-institutional investors. About 60% of the whole demand for shares stemmed from the top 5 IPO investors. For the remaining 40% there were many difficulties in finding new people willing to invest their fund in the luxury yacht industry.
The new 2 euro-a-share valuation corresponded to a market value of 581 million euros, while the target of the management was to value the company 1.1 billion euros in market value.
It was for this reason that on October 18th, Ferretti’s CEO officially announced the retirement of the IPO project, explaining that the current shareholders were not happy with the valuation of the Company and that they preferred to pursue a simpler private placement among the investors who showed interest in acquiring a stake in the firm.
Ferretti’s IPO cancellation was the fourth in Europe during October, with Kazakhstan’s Kaspi.kz postponing its listing on London Stock Exchange and Germany’s Domicil Real Estate and Logistrial pulling their deals, earlier during the month.
It is common opinion among the analysts and experts of the European market that the cancellation of Ferretti’s IPO has capped a dismal European season for stock market listings, with cautious optimism evaporating amid global trade tensions and Brexit angst.
It is clear that 2019 has been a challenging year for the European IPO market, with investor sentiment battered by expectations of an economic slowdown as Brexit and the U.S.-China trade war (looks more like a soap-opera though) took their toll during the course of the year.
In an article published on Reuters, earlier in November, Christoph Stanger, co-head of equity capital markets at Goldman Sachs, said that “The markets are extremely volatile beneath the surface of stock index peaks. Investors are looking for growth or secure assets with stability and sufficient size and liquidity,” saying that investors are very selective as a result.
This showed how uncertainty in the political environment in advanced economies such as the English, Chinese and American ones can lead to potential disasters for their markets.
Alessandro Liori