Luxury car maker Porsche is set to defy the global drought in stock market listings this year with a bang. Its spin-off from Volkswagen seems set to price at the top of its price range according to press reports, giving it a market capitalisation of around $75 billion and making it one of Europe’s largest ever IPO’s.
This would rank Porsche as the fifth largest listed global carmaker, just behind parent Volkswagen, and well-ahead of General Motors. This is an even bigger achievement in a year when global IPO activity has fallen over 60%. And the weak equity markets tested new bear market lows for the year.
A successful IPO will be welcomed by parent Volkswagen who are set to receive billions to help fund their electric vehicle transition, and by its shareholders, set to receive a large dividend of Porsche proceeds.
We think Porsche is the global IPO exception rather than the start of a new listing recovery. It is a unique combination of strong name recognition, premium brand, big parent backing, and with a prior stock market listing history.
Arguably the biggest test is still to come. With Porsche needing to deliver on its plan to successfully grow volumes and profit margins into the slowing global economy. This would help it avoid the 45% price decline seen this year by the Renaissance International IPO index of recently listed stocks.
Ben Laidler, Global Markets Strategist at eToro
