Ferrari flotation makes it a thoroughly modern firm


The news that Fiat Chrysler Automobile is to float part of Ferrari might at first glance suggest the end of family ownership for the famous sportscar brand. In fact the Agnellis will keep control, and the way they are handling the flotation will make Ferrari a quintessentially modern family firm.

Rumours of a Ferrari flotation have been in the market for months, following sub-par performance on the Formula 1 track, and the move in September to replace CEO Luca di Montezemolo with Sergio Marchionne, the Agnelli family’s right-hand man. Other changes on the board – for example bringing in people from Chrysler and from other Fiat-owned sports brands – have modernised it and integrated it with the larger group, subtly changing its complexion.

The Agnellis own 30% of FCA, and 90% of Ferrari – the other 10% is owned by Piero Ferrari, the son of the marque’s founder Enzo. Just 10% of Ferrari will be floated, and FCA’s shares distributed among its existing shareholders. Assuming that it will be done in line with the percentages of the stakes they already hold in FCA, that would leave the Agnellis with about 27% of the shares.

That is about the same that they own in FCA, but an innovative scheme that rewards long-term shareholders means that they have almost 50% of the voting rights in FCA. A similar strategy at Ferrari would of course give them just over 40% of the voting power.

That is wise, because as we have written before, family firms tend to perform best – and better than non-family firms – when the family controls 30-50% of the shares, and when the CEO is a family member. Marchionne evidently has the family’s interests at heart, so he is in this respect as good as a blood relative.

Fiat has once again showed that it is an exemplary modern family firm, and unafraid to dilute its stake to make its businesses sharper. Bravo.