Porsche Public Debut Set to Raise $9.4 Billion in Break of IPO Drought

  • Luxury carmaker Porsche is set to go public in Europe later this month at a valuation of as much as $75 billion.
  • Parent company Volkswagen is selling some of its stake in the company and could raise nearly $10 billion from the sale.
  • With investors still on the defensive, Porsche’s debut will help break a nearly year-long drought in the IPO market.

Porsche will Available later this month With a valuation of $75.1 billion, it could be Europe’s third-largest IPO ever and the largest in more than a decade.

The luxury automaker’s public debut is being driven by its parent company Volkswagen, which is set to rake in nearly $10 billion in IPO proceeds after selling some of its stake.

The German auto giant, the world’s second-biggest car company by sales, plans to use the proceeds to fund its ambitious electric vehicle ambitions. The company could also use some of the IPO proceeds to pay its investors a special dividend in early 2023, According to Reuters.

Porsche initially targeted a valuation of as high as $85 billion, but has since lowered its target valuation range to between $70.1 billion and $75.1 billion.

Porsche’s IPO will help break the ongoing drought in the IPO market, which has been devastated by a rolling bear market in stocks amid fears of high inflation, soaring energy prices and a potential recession.

The U.S. IPO market has had one of the longest stretches of initial public offerings since the dot-com bubble burst some 20 years ago. But globally, the situation is the same. The global IPO market has raised just $80.5 billion in 2022, spread across 1,617 deals, according to data compiled by Bloomberg.

That’s in stark contrast to the global IPO market in 2021, which has raised more than $700 billion in more than 4,000 deals.

Confidence in Porsche’s listing was backed by pledges from several investors to buy large amounts of shares, despite capital markets hanging in the balance. Qatar Investment Authority, T. Rowe Price and Norway’s sovereign wealth fund will buy nearly 40% of the equity offering.

Investors are likely to focus on the potential upside that peer luxury automaker Ferrari realizes when it goes public in 2015. Ferrari’s valuation has soared from about $10 billion when it went public to about $35 billion today.

A potentially positive investor reaction to Porsche’s upcoming stock offering could signal to investors that the IPO drought is coming to an end. But it will also be influenced by the Fed’s upcoming decision to raise interest rates as it continues to tighten policy, hurting risk assets and weakening investor sentiment.

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