Volkswagen halts truck unit IPO

BERLIN: Volkswagen (VW) would halt preparations for an initial public offering (IPO) of its trucks unit Traton until market conditions improve, stalling what was expected to be Germany’s biggest share offering this year.

The automaker had previously said it could list up to 25 per cent of Traton in a deal that was expected to raise 5-6 billion euros ($12 billion).

Volkswagen said it would still aim for an IPO once market conditions improve.

“We regret having to distance ourselves, because of currently weak market conditions, from a stock market listing of Traton,” Volkswagen Group’s Chief Financial Officer Frank Witter said.

Volkswagen’s management board still believes in the rationale of a stock market listing when market conditions improve, Witter said.

Britain’s looming departure from the European Union and a trade dispute between the United States and China have caused uncertainty on stock markets, making investors hesitant.

Sharp fluctuations on the markets make it difficult to determine the price for an IPO.

In September Volvo Cars and its Chinese owner Geely also postponed plans to list the Swedish carmaker blaming trade tensions and a downturn in the automotive industry. Proceeds from European listings are down 97 per cent so far this year, according to Refinitiv data.

Volkswagen’s management board unanimously backed plans for listing Traton and had in recent days been considering modifying its plan, including reducing the stake of Traton that it planned to float to 15 per cent from 25 per cent, people close to the matter said. On Tuesday, Volkswagen’s Chief Financial Officer Frank Witter said the board unanimously backed the idea of listing Traton but warned markets remained volatile. On Monday he had said an IPO of Traton would not come at any price.

Reuters