Posted on November 3, 2014.
This article, by Robert Franck, was posted on the website of CNBC
For $500 million or $600 million you could buy about a dozen Ferrari 250 GTOs. Or, you could buy 10 percent of Ferrari itself.
Fiat Chrysler Automotive plans to sell 10 percent of Ferrari and distribute the remaining shares to FCA shareholders, a move that has sparked all sorts of speculation, fear, excitement and anxiety among wealthy Ferrari owners.
Some say that in becoming a stand-alone company, Ferrari will be forced to make higher-volume, lower-quality cars to satisfy shareholders. Others say selling a small slice to the public won’t effect the brand or product at all. Yet the sale of 10 percent of the company can also be seen as the ultimate Ferrari auction. Ferrari experts say that many of the global billionaires who own and worship Ferraris, and who are spending tens of millions of dollars to buy a Ferrari at auction, may also want to buy a piece of the stock.
The status premium could send bidding for the stock far beyond rational or purely financial levels.
“I could easily imagine some of these billionaires wanting this Ferrari stock certificate hanging on their garage walls next to their Ferrari collections,” said Marcel Massini, a leading Ferrari expert and Ferrari historian. “It’s another kind of Ferrari status symbol. So I think the levels could be higher than what we would usually see for a stock. That might be part of their strategy.”
Analysts estimate that Ferrari could be worth somewhere between $5 billion to $6 billion, so 10 percent could be valued at $500 million to $600 million. That’s a big investment. But for many of today’s multibillionaires, it’s literally driving around money — especially if they only buy a slice of the 10 percent.
So which billionaire Ferrari buffs might want to own shares?
At the top of the list would be Lawrence Stroll, a Canadian fashion magnate worth an estimated $2.5 billion. Stroll has become a serious Ferrari fanatic in recent years. He’s a Ferrari dealer and one of the biggest Ferrari collectors in the world with more than two dozen top collectible Ferraris. Last year, he paid $27.5 million for a 1967 275 GTB/4S N.A.R.T. He also owns a racetrack in Quebec and has become a fixture at most major Ferrari events.
Ralph Lauren is another Ferrari buff who could afford to buy a piece of the company. The fashion tycoon has a vast collection that includes several top Ferraris, including a prized vintage Testarossa. Lauren has his own company shares to manage of course, but buying a stake in Ferrari would be a fashionable accessory for his collection.
Craig McCaw, the cellphone mogul, is another Ferrari buff who might like shares. McCaw reportedly paid $35 million for a 250 GTO a couple years ago and loves vintage Ferraris. With a net worth estimated at just under $2 billion, he can afford to put a little Ferrari in the tank of his investments.
Some other Ferrari-fan billionaires include Tony and Lulu Wang, who race their Ferraris regularly and own a 250 GTO; Rob Walton, who likes racing his Ferraris and Maseratis; and Chip Connor, chief of William E. Connor & Associates, in Hong Kong, who often attends vintage-Ferrari events.
Of course, another big car company — like BMW or Volkswagen — could come in and buy the shares or all of Ferrari itself. BMW could use an Italian flag in its sports lineup to better compete against VW’s Lamborghini and Bugatti. And some Middle Eastern, Russian or Chinese billionaire could even team up to buy all of Ferrari someday.
But for now, buying a stake in Ferrari looks like a bargain compared with buying one of its vintage cars.
