Very few companies would voluntarily try to go public in the current stock market. Yet two multi-billion-dollar household names, both of them profitable, are planning blockbuster IPOs right now.
Volkswagen shareholders will receive a special dividend of about $9 billion in 2023. While long-term investors like the Porsche family and Qatar's sovereign wealth fund are putting new money into the IPO, most rank-and-file shareholders will actually be taking money out.— the investors in the VC funds who poured $2.7 billion into the company from 2012 onwards — will also like to see a clear public valuation for their stake.
Many of those investors — foundations, endowments, and the like — allocate a set percentage of their assets to venture capital. When their stock and bond portfolios fall, as they have done in recent months, VC can look overweight, making it harder for them to invest more in the asset class. If Instacart's public valuation is lower than its most recent private valuation, as seems likely, then that will reduce the value of the investors' stakes, possibly allowing them to allocate more money to their favored VC funds.If an IPO price is low, then that just means there's more potential for stock price appreciation. That can be very attractive to long-term investors.
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