PublishedSeptember 6, 2022 at 00:31.
AutomotiveVolkswagen approves Porsche IPO
Through the operation, Volkswagen should secure the billions it needs to fund its investment in an electric, connected and autonomous vehicle.
The world’s second largest carmaker, Volkswagen, on Monday evening gave its go-ahead to list its subsidiary Porsche on the stock exchange, making it one of the biggest listings in Europe even as the markets are on a slippery slope.
Volkswagen’s board “decided today, with the approval of the Supervisory Board” to float its subsidiary Porsche AG “subject to further developments in the capital market” with the aim of “realizing by the end of the year,” according to a statement from the two bodies that met during the day.
The IPO will be launched “at the end of September or early October” with the intention to “float” some of Porsche’s capital, a prelude to a public offering. The German manufacturer presented its project last winter, exactly on February 24, on the first day of the Russian army’s invasion of Ukraine.
The economic turmoil that followed, especially in the stock markets, called into question the timing of this “IPO” – Porsche’s entry into the stock market. But the maker of the mythical 911 has always aroused the greed of investors who, according to Bloomberg, value the Zuffenhausen company near Stuttgart (southwest) at between 60 and 85 billion euros.
International investors, including US-based T Rowe Price Group and Qatar’s sovereign wealth fund, have already expressed interest in signing up for the operation, along with billionaires such as Dietrich Mateschitz, founder of energy drink maker Red Bull, and LVMH president Bernard Arnault, the agency said.
Influence of the Porsche-Piech clan
Porsche is currently wholly owned by the Volkswagen Group. This, in turn, is controlled by the financial holding company Porsche SE, through which the Porsche-Piech family holds an absolute majority of the voting rights (approximately 54%).
The German region of Lower Saxony is also a direct shareholder of Volkswagen, up to 20%, thus being able to exercise its influence there. This design prevents the Porsche-Piech family, the majority shareholder of the Porsche holding company, from exerting significant influence over the Volkswagen group and therefore the Porsche nugget to date.
Porsche’s capital was divided into 50% preference shares offering increased dividends but no voting rights, and 50% ordinary shares with voting rights. Institutional investors will be able to subscribe for “up to 25%” of the preferred shares at a price yet to be determined.
They will also be offered to the general public in Germany, Austria, France, Italy, Spain and Switzerland, according to a separate Porsche press release. At the same time, VW authorities approved the sale of “25% plus one share” of the “common” shares of Porsche AG to the holding company Porsche SE. Thus the Porsche-Piech clan would have a blocking minority in the family business started by engineer Ferry Porsche after World War II.
Porsche’s “IPO” should also boost the market valuation of the parent company, which is about 85 billion euros behind, in particular, compared to big rival Tesla, which is worth about ten times as much. By relinquishing some of its control over Porsche, Volkswagen will receive the billions it needs to fund its investment in an electric, connected and autonomous vehicle.
This is above all a “historic moment for Porsche”, said Volkswagen’s new boss from September 1, Oliver Blume, who was previously chairman of the board of directors of Porsche and remains so at the moment. Partially listed on the stock exchange, Porsche will have “greater independence”, becoming one of the “most successful sports car manufacturers in the world,” he added.
Oliver Blume presented ambitious targets for Porsche in July, with an operating profit margin of over 20% in the long term. The electric Taycan manufacturer plans to release a new model of an all-electric SUV. Oliver Blume has promised that 80% of the automaker’s vehicles will be all-electric by 2030 to meet the global demand for electrified luxury vehicles.