Volkswagen sets modest starting price for truck flotation
German car giant Volkswagen said Thursday it would set a starting price of 27 euros ($31) per share when it floats truck division Traton, at the low end of its previous ambitions.
VW will offer Frankfurt and Stockholm investors on Friday an 11.5-percent stake in the unit, which brings together well-known brands MAN (Germany) and Scania (Sweden) as well as VW-branded trucks sold in South America and Africa.
It expects the 57.5 million shares will raise 1.55 billion euros and Traton, which had been wholly owned by the Wolfsburg-based parent company, will be valued at 13.5 billion euros.
"We have gained the trust of investors and we will work very hard to build on that trust," Traton CFO Christian Schulz in a statement.
He added that the floatation "in the current market environment, despite the volatility, proves Traton right".
Major Swedish pension fund AMF has already committed to buying 200 million euros of shares, Volkswagen has previously said.
Traton sold some 233,000 vehicles in 2018, with its 81,000 employees bringing in almost 26 billion euros in revenue.
While the share price and company valuation are at the low end of the range VW cited just two weeks ago, the flotation should be one of the biggest initial public offerings (IPO) in Europe this year and might joint Germany's all-time top 10.
But it will remain well below 2018's top IPO, Siemens' medical devices division Healthineers, which raised 4.2 billion euros.
VW had originally slated the flotation for April, but announced in March that it would hold off as market conditions looked unfavourable.
What's more, it has scaled back the size of the stake on offer, from a first-mooted 25 percent float aimed at raising up to six billion euros.
Friday's cash infusion will help the parent company stem the costs of the massive investments needed as it transitions to electric drive in lighter vehicles.
The flotation could also be a first step towards simplifying the sprawling group with 640,000 employees.
© 2019 AFP