How Porsche Could Warm Up Europe’s Ice-Cold IPO Market
VW’s Balancing Act
Beginning September 29, shares of Porsche will begin trading on the open market in what will be one of Europe’s largest public listings in decades. Parent company Volkswagen (VWAGY) says around half of the gross proceeds will be distributed to shareholders as a special dividend.
The IPO values Porsche as high as $78 billion. VW created 911 million shares of the new company, in a nod to the sports car maker’s iconic 911 model. Analysts note VW trying to find the perfect balance between maximizing the sale’s proceeds while also pursuing a successful IPO. That could prove difficult in the current market.
Present Challenges, Future Goals
Similar to the broader stock market’s struggles, the IPO market has been under pressure in 2022. This is a result of record inflation, corresponding fears of a recession, and the Ukraine-Russia conflict, all of which have diminished investor’s appetite for risk.
For Volkswagen, it’s an extremely important process that could help transform the company and secure its future. CFO Arno Antlitz previously explained the funds raised through the Porsche sale will help transition VW toward becoming an electric car maker. To that end, Volkswagen says the freed up capital will buy them some time to further develop its network of battery factories.
Watershed Event?
Europe’s IPO market was down considerably through August in comparison to last year. Companies had raised less than $10 billion in initial public offerings at that time, according to Bloomberg. That’s a 83% drop year-over-year.
Some industry observers feel that could change with the Porsche deal. It figures to be Europe’s largest IPO since miner Glencore Plc (GLNCY) raised almost $10 billion in 2011. The thinking is that if VW successfully pulls off the Porsche public listing it could entice other big names to follow suit. Still, it’s not clear what level of enthusiasm the market will show amid otherwise challenging conditions — even for a marquee brand name like Porsche.
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