October 16, 2019 / 11:41 AM / a month ago

Ferretti IPO book covered at lowest price thanks to Asian demand: source

FILE PHOTO: Prospects inspect a Ferretti Riva yacht at the Singapore Yacht Show on Sentosa Island April 25, 2015. Picture taken April 25, 2015. REUTERS/Edgar Su/File Photo

MILAN (Reuters) - Italian luxury yacht maker Ferretti has enlisted Asian investors to help it fully cover its initial stock offering at the low end of a downwardly revised price range, a source familiar with the matter said.

Ferretti’s IPO closes on Wednesday, after the company was forced to extend the offering period as well as cut the indicative price range to 2.0-2.5 euros from 2.5-3.7 euros due to poor demand.

At the price of 2 euros a share at which the books are covered, Ferretti would be worth 580 million euros ($640 million) after a proposed capital increase, less than the company and its shareholders were hoping to fetch.

Speaking on condition of anonymity, the source said that a large portion of the demand for Ferretti shares came from Asian investors different from regular institutional buyers such as asset managers, insurers or pension funds.

The top five investors in the IPO accounted for 60% of the demand, with two “non-institutional investors” set to take, respectively, 24% and 16% of the offering, the source said.

Ferretti is controlled by Chinese conglomerate Weichai Group.

Ferretti’s difficulties in attracting sufficient demand for its shares have left the market wondering how another two Milan IPOs by audio systems group RCF and food group Newlat will turn out, a Milan-based fund manager said.

RCF’s offer is set to conclude on Thursday while the Newlat IPO runs until Oct. 22.

A number of companies have rushed to list on the Milan bourse after a pro-European government in September replaced Rome’s previous anti-establishment coalition, which had scared off investors with its confrontational attitude and frequent clashes with the European Union.

Reporting by Elisa Anzolin, Editing by Alexandra Hudson

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