The Ferretti Group on Thursday withdrew its initial public offering and request to be listed on the Milan Stock Exchange. According to a story on Il Sole 24 Ore, the group said the initial share price was too low. The group has worked with financial advisors over the last few weeks to find more institutional investors for the IPO. According to the paper, the group had a total order collection of 200 million euros.
Lowering its share price range to 2 to 2.5 euros per share from the previous 2.5 to 3.7 was not enough to raise financial interest. A note from the group said it has “taken the decision to stop the offer relating to the private placement despite the appreciation shown by investors, especially Italians and Asians who supported and believed in the company.” This is because the “deterioration of the conditions of the financial markets does not allow to properly value the company.”
“The placement book was entirely closed, but after a consultation, we took the decision to discontinue the offer,” the Ferretti Group told Trade Only Today in an email. “The current market conditions do not allow us to properly value the company. Our priority at the moment is to close the balance sheet and show the markets what we are worth, perhaps together with a new partner as early as 2020.”
"The best thing about the IPO we did was support Italian investors," Ferretti CEO Alberto Galassi told the paper. “We gained support from Generali, Mediolanum, Fideuram and Kairos. In particular, Mediolanum and Generali are among the top six investors that have adhered to the IPO.”
The paper noted that the main shareholder, Weichai Group, which owns 86 percent of the Ferretti Group, thought that 2 euros per share did not reflect the true value of the Ferretti Group. Piero Ferrari is the second major shareholder, with 13.2 percent of the company.
“We ended the half year with orders up 18 percent and EBITDA 25 percent, and if at the end of the year it will rise by 20 percent, it will be like eating a big panettone for us,” Galassi said. The group has “zero debt,” and therefore it can represent itself on the market “with the rules papers to make a nice IPO.” Galassi made it clear that “we didn't have to do an IPO; we wanted to make it a beautiful one.”
Weichai added: “We will identify the right moment.”
Ferretti “will continue to optimize the allocation of resources from the financial market and identify the right time for listing when the situation on the financial markets has stabilized,” wrote Tan Xuguang, president of Weichai Group and Ferretti Group, in the financial note, according to the paper.
Ferretti “will first close the budget and show what it is worth,” then proceed with a “private placement” of shares, Galassi said.
“The book has been closed and shares valued,” he said, “but at low prices, because the markets are nobody's friends, neither in Italy nor other countries.”
A new listing “will resume after we have shown the markets how much we are worth and together with a new partner.”
Galassi said the IPO was aimed at reinvesting in its existing eight brands, not buying new brands.