Ferrari IPO CASE

Please refer to the Capstone Assignment Instructions for details.

You are an intern at UBS in the greater Toronto area. You have been recently assigned to a joint task force of UBS Canada to assist UBS’s American office in their investment banking role as the leading underwriter in Ferrari’s IPO in 2015. You are asked by your supervisor to generate a per share price estimate for the IPO. Your reported IPO price or price range will be used in road shows as the beginning point for bargaining with potential institutional investors. Consider related case(s) we have discussed in class (available via syllabus) and complete the following case report on Ferrari: The 2015 Initial Public Offering. The report should be written in a professional manner (pay attention to language and formatting) and be ready to be review by the senior manager at UBS Canada. The report shall consist of the following:
· Introduction: Describe the context of the report, recommended IPO price/price range, and important factors considered in achieving the recommended price. Also, include a brief roadmap to the sections you will later include in your report.
· Analysis: Examine the problem being faced and discuss contributing factors (size-up). Show the steps you’ve used to reach your recommendation and implementation plan. Make sure to refer to your exhibits in your text. The following items (at least) are expected to be included in your report/presentation:
o Size-up analysis on important factors that need to be considered and discussed for pricing this IPO. Also, discuss the pros and cons for a company like Ferrari to go IPO in 2015.
o Perform a per share valuation of Ferrari using discounted cash flow analysis and comparable company analysis (a.k.a. market multiples approach). Show your detailed evaluation model in exhibits. If you wish, you can also include a clean completed Excel model with note in your submission for further details. In your report, for each method of valuation, discuss the important assumptions you have made (e.g. long-term growth rate & discount rate for DCF, selection of comparable companies & use of metrics for COMPs, etc.). You do not need to reach a final valuation recommendation here. Tip: Your recommendation does not necessarily match the actual IPO price marked in 2015. Keep in mind, the ending IPO price is affected by many other factors.
· Alternatives:
o Compare the valuation you obtained from two methods. How would weight them to reach a final per share valuation, or a range of per share valuation? Explain your choice of weight.
The key to success in Analysis and Alternatives section is to defend your chosen assumption/weight with reasoning and evidence, where applicable. You are also free to use actual pieces of evidence (e.g. historical performance data of industry peers, industry reports, news coverages etc.) from the real world to support your statements. However, do NOT use retrospective evidence to support your opinion (e.g. stock prices after IPO).

The report should be word-processed (or PDF), double-spaced, with 11-pt font and 1-inch margin. Do not exceed 30 pages in length. However, if a few more pages would help you explain your propositions better, feel free to do so. Just keep in mind that a report is not judged by its length, but its content.
Your report will be evaluated on an overall basis. However, to achieve a roughly A-level score on this project, you are expected to complete ALL required components with good quality (for example of “good quality”, see sample A-graded reports in UMLearn), along with reasonably professional writing and formatting. For higher score, at least one major section (size-ups and valuation methods) needs to demonstrate excellent quality in analysis (for example of “excellent quality”, see sample A-plus-graded reports in UMLearn).
Breakdown of page counts:
Intro: 1 page
Size up analysis: 3-5 pages
Per share valuation (2 methods see above): 10-15 pages including exhibits
Assumptions: 3-5 pages
Alternatives: 1-2 pages
Evaluation of alternatives: 4-5 pages
Important Note: I have included 2 A+ sample reports for references. The excel document included is where the calculations were done for the exhibits included in their report. Feel free to use the excel document templates to make it easier for you. Please note these example reports are on a completely different case and the numbers used are only for reference.

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