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Even after the IPO, Intel is planning to keep the majority stake in Mobileye.
Intel‘s self-driving car unit Mobileye is eyeing a significantly lower valuation than expected previously for its upcoming Initial Public Offering (IPO). People familiar with the matter said that this is due to the beleaguered state of the IPO market in 2022.
Originally expected to land a $50 billion valuation, Mobileye is eyeing a valuation as low as $20 billion. The sources also said that the company is planning to sell a smaller number of shares than originally planned. By floating less number of shares in the public market, the company is hoping to drum up interest while pushing the share price higher after listing.
Interestingly, Mobileye is also planning a roadshow for its prospective investors with the goal to start the trading of the shares by October 26. Intel has acquired Mobileye back in 2017 for a net sum of $15.3 billion. Earlier, it had announced plans to take this company public in September. Even after the IPO, Intel is planning to keep the majority stake in Mobileye itself.
As said, the tighter monetary policies and rising interest rates have cast a shadow on the IPO market. 2022 is turning out to be one of the worst years for IPOs raising the least amount of money since 1995. All three major US stock indices are trading in the bear market territory with more than a 20% decline year-to-date.
The US IPO Market
As per WSJ, hundreds of companies that planned for an IPO this year in 2022 have been waiting on the sidelines as investor interest wanes down. Rather than listing shares in the public market, these companies have been forced to sell private equity at reduced valuations. This leaves these companies with less money for growth and hiring.
However, Intel is still proceeding ahead with the Mobileye IPO despite uncertainty in the market. Intel Chief Executive Pat Gelsinger believes that this listing will give the self-driving car unit a higher profile while attracting more business. He also clarified that Intel doesn’t need the money generated through the Mobileye IPO.
As said, Intel will retain the majority stake in the company including all of the Class B shares issued by Mobileye. Each of these Class B shares will have voting rights equivalent to 10 Class A shares.
During the first half of the current fiscal year, Mobileye clocked revenue of $854 million, 21% up YoY.