As post-IPO performances from shoe brands and vanity social media platforms disappoint, investors are looking to the Seven Seas for new buys.
What happened: Viking Cruises has set sail on the rocky waters of public trading, as shares of the luxury cruise line began trading yesterday after its US$1.54 billion IPO. It’s one of the biggest IPOs of the year so far, propelled by what looks like another banner year for cruises.
- Viking has gained a cult following for its cruises among blue-blooded, older clientele thanks to its refined atmosphere, strict no-kids policy, and savvy tie-ins — who doesn’t want to go on a Downton Abbey cruise?
- Though still smaller than major rivals like Carnival or Royal Caribbean, its revenue growth outpaced the industry average between 2015 and 2023.
Why it matters: The IPO is another reason for pensioners to love cruises, as the Canada Pension Plan Investment Board (CPPIB) is one of the top shareholders of Viking’s parent company, with CPPIB and TPG Capital most recently investing a combined $500 million in 2020.
- Together, CPPIB and TPG Capital sold over 53 million shares for an estimated $24 a pop, which comes out to a titanic ~$1.27 billion in cash. That’s enough for them to build their own cruise ship if they wanted to.
Zoom out: The cruise industry should continue to be an attractive arena for capital. Lines like Carnival and Norwegian are primed for another record year of bookings as the pent-up post-pandemic demand for lazily baking in the sun on an ocean liner remains high.—QH