Largest Listing Ever?

Volkswagen (VWAPY) announced its plans early this week to float sports car brand Porsche. The carmaker published what is known as an intention to float for an IPO, which could occur later this month or in early October. It could also become one of the world’s largest listings in history, given the cachet and brand recognition associated with Porsche.

Still, there are challenges associated with the IPO market at present. Record inflation has put pressure on growth stocks, while the ongoing Russia-Ukraine war has caused energy market disruptions. To that end, Volkswagen notes the listing itself and the timing are “subject to further capital market developments.”

Valuation Prediction

Some estimates suggest a Porsche IPO could become the largest in German history. Data from Refinitiv (LNSTY) indicates the deal has the potential to be Europe’s biggest since 1999, when Italian energy firm Enel (ENLAY) went public.

Reports say investors expect Porsche to be valued between $60 billion and $85 billion. Rival brands like Aston Martin (ARGGY) and Ferrari (RACE) have seen their valuations dip recently.

Porsche’s status as a luxury brand has supported price growth and helped make it a key moneymaker for Volkswagen. While the more price-conscious VW brand saw its operating profit fall 8% during this year’s first half, Porsche’s EBIT gained 22% over the same time period. Volkswagen contends selling the brand would help the company move toward the production of EVs and related software.

Icy IPO Market

It’s not ideal timing for Volkswagen in terms of what’s happening with the IPO market. Executives say they could push the offering out to a later date, giving buyers more time to express their interest. If the market’s level of enthusiasm isn’t where Volkswagen wants it to be, the IPO could be canceled outright.

Reports note this is really more of a technical step taken by Volkswagen, opening up the possibility of a Porsche IPO. It also comes as the German auto industry predicts a 4% drop in passenger car deliveries for 2022 as a whole. Inflation and ongoing geopolitical tension are definitely a drag on the process, but no one on Wall Street can doubt Porsche’s pizzaz.

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