Frankfurt: German auto giant Volkswagen offered part of its heavy trucks division Traton on the stock market Friday as it looks to raise fresh capital, in what could be the first step towards reshaping the sprawling 12-brand group.
Stock in the unit, which is not listed on any of the German indexes, started at VW’s initial price of 27 euros ($30.70) but fell back to 26.68 euros around 11 am (0900 GMT).
Traton sold some 233,000 vehicles in 2018, with its 81,000 employees bringing in almost 26 billion euros in revenue.
It brings together well-known brands MAN (Germany) and Scania (Sweden) as well as VW-branded trucks sold in South America and Africa.
VW had already set the price tag for the 57.5 million shares on offer — an 11.5-percent stake — at the very bottom of the range of between 27 and 33 euros it first mooted weeks before, valuing the company at 13.5 billion.
The flotation brought in around 1.5 billion euros.
In Stockholm, where Traton is also listed, the shares fell to trade at 282 Swedish kronor (26.73 euros, $30.43).
“The Traton flotation means the second-largest IPO in Europe so far this year has taken place in Germany” after Italian payment processor Nexi, EY analysts commented in a note ahead of the stock market opening.
Powering up electric – The proceeds from the IPO will flow to a Volkswagen group in the middle of a costly transition towards electric mobility, autonomous driving and digital services.
Bosses plan to invest more than 40 billion euros over the coming years into next-generation vehicles, part of an ambitious strategy aimed at putting the “dieselgate” emissions cheating scandal squarely behind the company.
The group plans to launch some 70 electric models by 2028, aiming for sales of 22 million units over the coming decade.
But the heavy investments needed for the transformation have weighed on VW’s profit margins.
Meanwhile the simpler production processes for electric vehicles — with motors less complicated than combustion engines — will contribute to job cuts at the group in the coming years.
Opening up one of its divisions to outside investors represents a first attempt by VW to streamline its complex structure, which presently numbers 12 brands and 640,000 employees.
Some investors and analysts are unhappy with the present market capitalisation of the group — at around 75 billion euros — which they feel undervalues some of its crown jewels like sports car makers Lamborghini and Porsche.
VW shares remain slightly below the prices they attained just before the “dieselgate” scandal broke in September 2015.
Bosses had originally slated the Traton 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.
Nevertheless, “finishing the IPO in the current market environment, despite the volatility, proves Traton right”, finance director Christian Schulz said Thursday.
VW looked to reassure investors by announcing that major Swedish pension fund AMF would take a 200-million-euro holding in the truck business.