Fiat chief executive Sergio Marchionne said he’s pulling out all the stops to build U.S. investor interest before a listing there later this year following a merger with Chrysler Group LLC.
The new company, Fiat Chrysler Automobiles NV, will begin trading in New York in the first two weeks of October, with the exact date dependent on technical issues currently being addressed, Marchionne said in an interview in Basildon, England.
Chrysler’s rebound from bankruptcy is central to Fiat Chrysler’s appeal to investors with its “human-interest” angle, according to the CEO, who is spending about one-third of his time in the U.S. versus 25 percent in Fiat’s native Italy. Auburn Hills, Michigan-based Chrysler boosted U.S. sales 17 percent in May, faster than predicted by analysts, as demand for Jeep sport-utility vehicles surged 58 percent.
“The Chrysler story is one investors have followed from the beginning,” he said. “We were the poor kids, Cinderella at the ball. People in the U.S. actually like that. They like what happened. We paid all the money back and it was clean.”
While such an approach might appeal to casual and retail investors, it’s unlikely to sway sought-after institutional shareholders, Richard Hilgert, an analyst with Morningstar Inc. in Chicago, said in an interview.
“The Fidelitys, the Putnams, the Vanguards of the world are going to be looking more for solid investment reasons in the funds, the numbers, the cash flow of this company and what the potential is based on management’s vision,” he said. “That’s what’s going to be more important to most of the investors in the U.S.”
Marchionne said Fiat and the CNH Industrial NV business — which makes New Holland and Case tractors and Iveco trucks and is already listed in New York — must work to lift liquidity.
“We need to spend time talking with investors to get them buying in Europe and trading in the U.S.,” he said at CNH’s U.K. base. “You’ve got to see them all more than once, spend a day in Boston, whatever. It’s going to take more than a year, but Chrysler is a household name in the U.S. and that helps.”
Fiat bought full control of Chrysler in January, with the merger part of Marchionne’s decadelong effort to turn the Turin-based company into a carmaker big enough to challenge General Motors Co., Volkswagen AG and Toyota Motor Corp.
The Italian automaker plans to move its primary listing to the New York Stock Exchange after shareholders meet to approve the combination in the third quarter. The company’s board formally signed off on the formation of FCA earlier this week.
Fiat plans to raise as much as 4 billion euros ($5.4 billion) by issuing new bonds by end of 2015, providing flexibility to refinance debt as it implements the merger, it said June 15.
A plan to expand Alfa Romeo requires the upscale brand to establish its credibility “one car at a time,” with the first new model now a year away, Marchionne said.
“We have to have a car that is on a par with, if not better than, the German cars in powertrain and handling, and that’s also a great-looking car,” he said.
CNH CEO Richard Tobin said there’s no prospect of a long- term slump in demand for agricultural vehicles in Brazil, where sales have declined. The company has boosted investment budgets in India and China, he said, with the latter particularly “ripe in terms of mechanization.”