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"Italian car giant Fiat has begun the process to float Ferrari, the world's most famous luxury car brand, on the Milan stock exchange. Two separate banking sources, one in Italy, the other in London, told The Business that Citibank will list Ferrari as early as the second half of next year in a placing that would value the business at around €2bn (£1.34bn, $2.34bn.). As well as making the eponymous road cars, Ferrari runs a successful Formula 1 racing team and owns a profitable licensing business. The American bank, which formed a relationship with Fiat over the recapitalisation of CNH, its farm and construction business, is beginning to prepare the due diligence, but Fiat has yet to publicly commit to a float. Much depends on timing, because of the poor state of the automotive market. But the same sources say Fiat wants to be able to go ahead with a flotation of Ferrari when conditions improve. Fiat's balance sheet is seen as strong as far as debt to equity is concerned. But after years of troubles, it is not cash generative. It is thought that Mediobanca, which was pursuing a strategy to become a diversified industrial group, bought a 34% stake in Ferrari, valuing it at the time at €2.3bn. Mediobanca's focus has now changed, which was signaled in the summer when it sold 5% of its holding to Mubadala Development, owned by the Abu Dhabi government,which again valued the business at 2002 levels. Fiat's Ferrari business no longer includes Maserati, which was moved to Alfa Romeo because the two groups have more obvious synergies. It is feasible once again that while Citibank conducts the float process a more attractive approach could be made for some of Ferrari's stock. But sources say the current thinking is to prepare the business for a float which would give Ferrari's army of fans around the world a chance to own a piece of the prancing horse. One banking source said this weekend: " Citibank is preparing the listing for next year." Another source said:"Timing is the key to this as Fiat will be nervous to commit until they are sure the conditions are right." Luca di Montezemolo, president of Fiat and chairman of Ferrari, declined to return calls. Jean Todt, general manager of Ferrari, told The Business this weekend: "This is pure speculation." A Fiat spokesman said: "We have not started any process." "
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