Despite strong sales results and reported investor interest in an IPO offering 30% of the Italian yacht builder’s shares, the Ferretti Group nevertheless decided to pull the plug on the public listing in the final hours of the offer period. The builder cited deteriorating conditions in the financial markets which prevented it from getting the valuation it was seeking.
The Offer Period opened on 1 October with an indicative share pricing of €2.50 and €3.70, which would have delivered a company valuation of between €727m and €1.08bn. The first day of active trading was initially set to begin on the Milan stock exchange on 16 October.
In the midst of the Offer Period, Ferretti reported a strong order book which appeared to bode well for the public listing. The company said it had booked new orders totalling more than €465m for the first nine months of 2019, a gain of 18% over the same period last year. Consolidated Group revenue for the whole of 2018 were also up nearly 10% over 2017, totalling €609m for customer contracts. The company reported improved profitability as well, with a 29% jump in net income to €31m.
Ferretti’s IPO roadshow stretched from New York, across Europe and all the way to Hong Kong, supported by a prominent advertising campaign on several financial media websites. However, demand appeared to below what shareholders and the collaborating banks were expecting, leading Ferretti to announce it was extending the offer period, as well as cutting the indicative price range down to €2.00-€2.50 – slashing the valuation to €580m at the low end.
In the end, investors were only willing to pay €2.00 per share – a valuation the company’s primary shareholders, the China-based Weichai Group, felt was too low.
Even with the demise of the IPO, Ferretti is still bullish stating that its recent success story gives current management and shareholders the confidence to continue to pursue its development goals and execute its fully-funded business plan.
In an interview with Reuters, Ferretti CEO Alberto Galassi went even further saying, “You’ll see in 2020 a new investor will come on board,” indicating that one or more prospective investors from Europe might take a combined stake of about 30%.
Ironically, the Financial Times predicted the fate of Ferretti’s IPO correctly on September 30, “With recession signs on the horizon, ambitions for the IPO might have to be lowered.”