On Thursday we had the great honour to host at our university as guest speakers Davide Tavaniello and Loris Dell’Andrino, respectively Director and Associate Director at UBS Investment Bank. They took part to the event organized by our association to explain how one of the most known Italian companies went public, since UBS was the sole Global Coordinator of the whole operation.
The deal: listing of 10% of Ferrari’s stocks and a following spin off from Fiat Chrysler Automobiles (FCA).
Why UBS: because of its huge and worldwide platform of Net High Worth Individuals, which were probably Ferrari’s target customers and the Swiss Bank has assets under management (AUM) of $2.04 trillion, ranking in the first position.
The event was moderated by Milena Petrova, Assistant Professor of Finance, who stated in the introduction that we have assisted to a unique operation which has seen an Italian company going public and a consecutive spin off from the parent company, which is not so commonly seen. Moreover Mr. Dell’Andrino underlined another peculiar feature of the operation, which is the mixture of nationalities, the global reach and network: a historical Italian firm, being listed on a US Stock Exchange by a premium Swiss Investment Bank as UBS. A great triangle.
During their presentation they went trough all the steps of the IPO process: the preparation with due diligence issues, valuation by equity analysts, filing prospectus to the SEC, the marketing phase which included one to one meetings and roadshows for institutional investors and finally the listing and the beginning of trading. Getting into more technical details, the key point that made the listing successful was the ability of UBS to sell the company as a luxury one, this was really the discriminating factor. After analyzing its EBITDA and EBIT it is clearly evident that Ferrari is comparable with Prada, Moncler, LMWH and Ferragamo for example, who are all worldwide leaders in the luxury sector, and other peers in the USA market such as Tiffany & Co. and Polo Ralph Lauren. A suitable comparison can be also made with Harley Davidson, in terms of business model and strategy. Ferrari undoubtedly stands out among other high end carmakers. In the evaluation process, equity analysts went through a long and thorough analysis of the fundamentals of the company. This also included an on site tour in Maranello in order to deeply understand the entire production process: the passion for details and the perfection that distinguishes the “prancing horse”.
Then the marketing step followed, Mr Tavaniello explained that one to one meetings were arranged with the management team as well as the group investors presentations. Their roadshow touched the most important cities in the US and a couple in Europe such as London and Milan. It was a real success since demand was times and times more than the supply. Ferrari’s major strengths, which have driven investors to buy, were the business ability of generating value, its insensitive demand for Ferrari sports cars, which are mainly bought by High Net Worth Individuals (HNWI). Premium and international brand power, backed by “free advertisement” through the Formula One races. Mr Tavaniello highlighted the double usefulness of the “racing heritage”: worldwide visibility, that on one hand depresses the Gross Margin but on the other hand it heavily reduces some strategic costs, enabling Ferrari to have a higher EBITDA than other luxury companies. Secondly, Ferrari can transfer cutting edge technologies of the racing division to its available for sale cars. One of the most extraordinary advantages of Ferrari’s business model, is that it is based on a flexible and efficient production process, as a consequence it benefits of a negative net working capital.
The importance of this IPO raised on the 12th January 2016 when Ferrari got also listed in Borsa Italiana and becoming part of the FTSE mib index. Currently the title is pricing 42$ and it is facing a nosedive trend due to communication issues and the negative influence of general market volatility.
Vittoria Roà
The deal: listing of 10% of Ferrari’s stocks and a following spin off from Fiat Chrysler Automobiles (FCA).
Why UBS: because of its huge and worldwide platform of Net High Worth Individuals, which were probably Ferrari’s target customers and the Swiss Bank has assets under management (AUM) of $2.04 trillion, ranking in the first position.
The event was moderated by Milena Petrova, Assistant Professor of Finance, who stated in the introduction that we have assisted to a unique operation which has seen an Italian company going public and a consecutive spin off from the parent company, which is not so commonly seen. Moreover Mr. Dell’Andrino underlined another peculiar feature of the operation, which is the mixture of nationalities, the global reach and network: a historical Italian firm, being listed on a US Stock Exchange by a premium Swiss Investment Bank as UBS. A great triangle.
During their presentation they went trough all the steps of the IPO process: the preparation with due diligence issues, valuation by equity analysts, filing prospectus to the SEC, the marketing phase which included one to one meetings and roadshows for institutional investors and finally the listing and the beginning of trading. Getting into more technical details, the key point that made the listing successful was the ability of UBS to sell the company as a luxury one, this was really the discriminating factor. After analyzing its EBITDA and EBIT it is clearly evident that Ferrari is comparable with Prada, Moncler, LMWH and Ferragamo for example, who are all worldwide leaders in the luxury sector, and other peers in the USA market such as Tiffany & Co. and Polo Ralph Lauren. A suitable comparison can be also made with Harley Davidson, in terms of business model and strategy. Ferrari undoubtedly stands out among other high end carmakers. In the evaluation process, equity analysts went through a long and thorough analysis of the fundamentals of the company. This also included an on site tour in Maranello in order to deeply understand the entire production process: the passion for details and the perfection that distinguishes the “prancing horse”.
Then the marketing step followed, Mr Tavaniello explained that one to one meetings were arranged with the management team as well as the group investors presentations. Their roadshow touched the most important cities in the US and a couple in Europe such as London and Milan. It was a real success since demand was times and times more than the supply. Ferrari’s major strengths, which have driven investors to buy, were the business ability of generating value, its insensitive demand for Ferrari sports cars, which are mainly bought by High Net Worth Individuals (HNWI). Premium and international brand power, backed by “free advertisement” through the Formula One races. Mr Tavaniello highlighted the double usefulness of the “racing heritage”: worldwide visibility, that on one hand depresses the Gross Margin but on the other hand it heavily reduces some strategic costs, enabling Ferrari to have a higher EBITDA than other luxury companies. Secondly, Ferrari can transfer cutting edge technologies of the racing division to its available for sale cars. One of the most extraordinary advantages of Ferrari’s business model, is that it is based on a flexible and efficient production process, as a consequence it benefits of a negative net working capital.
The importance of this IPO raised on the 12th January 2016 when Ferrari got also listed in Borsa Italiana and becoming part of the FTSE mib index. Currently the title is pricing 42$ and it is facing a nosedive trend due to communication issues and the negative influence of general market volatility.
Vittoria Roà