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.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

TLS 1.2 Encrypted
Equal Housing Lender