ABB takes valid detour around hairy IPO markets

An electric car charges on a street in London, Britain, February 4, 2020. REUTERS/Antonio Bronic

LONDON, Nov 21 (Reuters Breakingviews) - Swiss engineering group ABB (ABBN.S) has spun off an 8% stake in its business that makes electric vehicle chargers to investors including Interogo Foundation, which owns IKEA.

The deal, which values ABB E-mobility’s equity at 2.5 billion Swiss francs, is a halfway house after original plans for an initial public offering were delayed by volatile markets. In the year or so that the $57 billion group has been planning for a listing, valuations for charging manufacturers have collapsed.

Still, Chief Executive Björn Rosengren can be pleased with the outcome. The deal values the unit at around 3 times 2023 sales, assuming far-from-impossible 50% revenue growth this year and next. That valuation is marginally above listed peer Wallbox. And it makes sense strategically. The charging division gets long-term investors, a beefed-up board and greater independence, making an IPO easier when markets recover. ABB meanwhile continues to streamline its operations to focus on the core fast-growing areas of electrification and automation. Right now the group’s premium valuation of around 19 times forward earnings, as per Refinitiv data, leaves rival Siemens (SIEGn.DE) in the dust. Its chargers deal should keep things that way. (By Neil Unmack)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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