SAP SE is planning a partial spinoff of Qualtrics, the experience management software company it acquired for $8 billion in November 2018, in an  public offering.

The spinoff was announced today, July 26. SAP said the primary objective of the IPO was to “fortify Qualtrics’ ability to capture its full market potential within Experience Management” and to “help to increase Qualtrics’ autonomy and enable it to expand its footprint both within SAP’s customer base and beyond.”

It’s a somewhat surprising move, since SAP acquired the company to build out its operational data with Qualtrics’ experience data and insights, enabling it to manage supply chains, networks, employees and core processes better. But the German software giant intends to maintain a majority stake after the IPO.

Officially SAP is saying that the IPO is all about increasing opportunity for Qaultrics, but there’s possibly more to the story that isn’t being officially disclosed. It could come down to a possible change in focus for SAP, but it sold its Digital Interconnect communications business to Sinch AB for $250 million in May. So there is some rough precedent here for SAP diverging itself of some companies and divisions.

Post-IPO, Qualtrics founder Ryan Smith will maintain his role at the company and will be Qualtrics’ largest individual shareholder.

“Since SAP, as majority shareholder, will continue to fully consolidate Qualtrics, the transaction is not expected to have an impact on SAP’s 2020 or longer-term financial targets,” SAP said.

Aside from the unexpected nature of the IPO, the float of Qualtrics will be a large one given that it has potential valuation above $10 billion. Post-SAP acquisition, the company has continued to grow, and it had been planning to go public before it was acquired by SAP, so it could be argued this was the IPO Qualtrics was always meant to have.

The timing of the IPO was not revealed. SAP said only that “a final decision on the IPO and its conditions and timing is pending and subject to market conditions.”

Photo: SAP