There has been a remarkable level of interest in the upcoming Porsche IPO from all over the world, and it appears that things are finally coming to a head. There is still no date set in stone, but it does seem that the movement internally suggests that an IPO is imminent.
In this article, we’ll unpack what we know so far about the IPO itself and what circumstances surround it.
Multiple reports claim that Volkswagen will discuss the IPO at their management meeting on Monday, 5 September. The company has undertaken various feasibility studies to evaluate the prospects of a public listing and it seems that they are getting set for a September or early October IPO. This planning has been on the go for months but the challenging macroeconomic conditions have slowed things down significantly.
Supposedly this meeting will be one that gives more clarity to the market because there are a number of major investors who have already expressed their interest. They will also discuss how to handle the potential sale of the ordinary shares to the family owners – another contentious issue for interested public market investors.
If the Porsche IPO goes as planned, it will be one of the largest IPOs ever seen in the European market. Porsche is, of course, a highly valuable luxury brand that holds tremendous cultural cache worldwide, but that’s not the only reason this is such a big deal. As a company, they have expanded into a seriously impressive operation with strong profitability and a value chain that touches every aspect of automobile manufacturing. This, combined with the scale, makes the IPO one that is very highly sought after.
The timing of this is also interesting because IPO markets have been relatively quiet over the last two years as the world reeled from the COVID-19 pandemic. This represents a return to normalcy and as such, it’s likely to receive a lot of interest from investors who have been holding cash on the side waiting for an opportunity to deploy it. What impact this will have on the valuation remains to be seen – and some analysts have suggested that it could be significantly overvalued when compared to similar IPOs in the past. But as we’ve seen in recent times, all this is relative to the other opportunities out there.
There has been rife speculation surrounding the price of the IPO and that continues. The Wall Street Journal reports that analysts suggest a market capitalization of between 60 and 85 billion euros would be a reasonable estimate. The variance here will depend mainly on how they choose to deal with the family shareholding and how that affects the number of shares on offer to the public.
Another aspect that plays a role here has been the recent upheaval within Volkswagen management. The company is trying to adapt to a world where cleaner energy is a must, and that will come with a lot of concern about whether they can make the shift effectively. Investors must assess the likelihood of success in that endeavour, and then build those evaluations into deciding what a fair price actually is.
Lastly, the price of oil (and thus fuel) in Europe is also a sticking factor that could impact the initial valuation. After the Russia-Ukraine conflict, prices remain sky-high – making it more challenging for an automobile company to justify the sort of valuation that is being touted. While many analysts think that this short-term shock will be rectified, it is anything but clear.
All that’s left for investors to do is to wait and see what comes of the management meeting at Volkswagen. That should provide some information that points to when the IPO might take place and what it will mean for the terms. From there, the wheels should start whirring and we could find ourselves with an IPO before the end of the month. Then again, if we see further delays, it could stretch into October and even beyond.
The listing is anticipated to be a key source of financing for Volkswagen, and so it will also be a catalyst for them to push towards the future. From a Porsche perspective, having the family as the major owners once again might restore some nostalgia and history to the brand – which counts for a lot according to Porsche fanatics.
Either way, the Porsche IPO is still one of the most exciting IPOs on the horizon and the next few weeks will be some of the most important of the year for public investors. The world awaits…
The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.
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