IPO Focus: Chrysler May Sell More Of Ferrari Stake Than Planned

(RTTNews) - Ahead of the Ferrari IPO this year, Fiat Chrysler Automobiles (FCAU) said it would sell more than the 10 percent stake it initially planned in the luxury car division's public debut as investor sentiment brightens and the need to stabilize stock prices gain importance.

Demand for the stock is much higher than foreseen and attention must be paid not to create imbalances in the stock price, Fiat Chrysler CEO Sergio Marchionne is reported to have told journalists at the Geneva International Motor Show on Tuesday.

"In an ideal world, I would like to limit it to 10 percent because that is in line with what we announced," said, Marchionne, who is also the chairman of Ferrari. "If it turns out that there isn't enough liquidity with that stake, we might have to increase it."

Fiat Chrysler, which owns 90 percent of Ferrari, last year said it plans to sell 10 percent in the luxury car division's IPO. As for the remaining stake, feeble chances are that Fiat Chrysler may distribute it to its investors by year end.

The other 10 percent stake in Ferrari, held by Piero Ferrari -- the son of founder Enzo Ferrari, is expected to retained by him.

For Fiat Chrysler, selling more shares in the Ferrari IPO would bring in more funds to invest in its ambitious $55 billion growth plan.

However, it would lead to a reduced holding in Ferrari by the Agnelli family, Fiat's founding family and which owns a controlling stake in Fiat Chrysler. But this could be averted by adopting a loyalty-ownership program that gives stronger voting rights to long-term shareholders.

The separation of Ferrari includes creating a holding company registered in the Netherlands and preparing for a New York Stock Exchange listing, reports quoting Marchionne said.

The spinoff will mean that public shareholders would own a majority of the equity in Ferrari. In the event that a loyalty-owner plan is adopted, then Fiat Chrysler Chairman John Elkann and other descendants of Giovanni Agnelli would hold a combined 36 percent of the votes and Piero Ferrari another 15 percent, according to Bloomberg.