It was the largest international stock offering ever launched, and the biggest flop in the Euro-equity market to date. The attempt to sell $2.1 billion of Fiat shares in late September - $1.6 billion internationally and $500 million in Italy -left the underwriters with heavy losses and caused acute embarassment for the lead manager, Deutsche Bank Capital Markets. But it also provided some valuable lessons, and most observers agree that thc debacle will not undermine the continued growth of the international equity market.
In many ways, the Flat offering was unique, and not just in terms of its size. (Earlier in the year, about $1.5 billion of Daimler-Benz shares were successfully placed, in a deal also lead-managed by Deutsche Bank, apparently demonstrating that size alone need not be a problem.)
The deal came to fruition very quickly and in secret, because of the circumstances which had led to the availability of the Flat block, allowing little time for groundwork and preparation. Some of the shares involved were virtually unmarketable, as a little research into the recent attitudes of Italian investors would have shown.
The shares were priced near their all-time high, after a steep escalation in MHan, at a time when the idiosyncratic Milan stockk market and other markets were faltering.