Volkswagen to list Porsche in one of biggest IPOs in years: Report

Volkswagen (VW) said  that it would list its iconic sports car maker Porsche in one of the biggest initial public offerings in years and a crucial test of investors’ confidence as high inflation and the war in Ukraine put a damper on the global economy, the Wall Street Journal reported.
 

The offering could value Porsche at between 60 billion euros and €85 billion, equivalent to between $59.8 and $84.6 billion, according to analyst estimates, injecting fresh cash into VW’s coffers that executives say will help the company bankroll its transition to electric vehicles and self-driving cars.
 

“We have shown a huge resilience especially in crisis times,” VW and Porsche Chief Executive Officer Oliver Blume said Tuesday on a call with reporters. “Looking back on the corona crisis, the semiconductor crisis, this year with the Ukraine conflict, we always have been able to show very high profit margins and we think this will be very convincing.” 
 

The share sale will give the Porsche and Piech family greater sway at their former company, some 13 years after they were forced to sell the sports-car business to Volkswagen. More than a decade ago, the family business Porsche Automobil Holding SE tried to take over control at the much-larger Volkswagen, but the bold move that saw emotions run high failed when funding dried up during the financial crisis.

 

The listed Porsche will have a dual share structure similar to Volkswagen with voting and non-voting shares. Porsche’s planned small free float and limited managerial independence — Blume will carry on as head of Porsche and VW — has triggered governance concerns similar to criticism leveled at VW’s convoluted structure. 
 

VW is selling IPO investors a 12.5 per cent stake in the company through an offer of non-voting preferred shares. At the top end of Porsche’s targeted valuation of 85 billion euros ($84 billion), this would see VW receive some 10.6 billion euros in proceeds. 
 

The company is also selling common shares, which carry voting rights, to the family’s Porsche SE, which holds 53 per cent of VW voting rights. VW will pay out a special dividend to help Porsche SE pay for a blocking stake of 25 per cent plus one share in the listed luxury-car maker. 
 

Volkswagen’s preferred shares rose as much as 3.9 per cent in Frankfurt trading. The company on Tuesday also filed its official intention to float on the Frankfurt stock exchange.
 

With the IPO, VW hopes to yield funds that will help bolster its ambitious investment plans.
 

At 85 billion euros, Porsche’s valuation would exceed Ferrari NV’s market capitalisation more than twice over, but the carmaker only makes a fraction of the more than 300,000 cars Porsche produces.