Despite the stormy climate at the stock exchange, with a recession looming and profit warnings ringing alarm bells, Volkswagen is launching an IPO of its goldcrest Porsche on the 29th of September. Referring to its most iconic sports model, 911 million shares will be made publicly available, representing a quarter of the company.
On Sunday, the board room of Volkswagen gathered to finalize details on Porsche’s IPO. Apart from fixing the date above, a listing price between 76,50 and 82,50 euros was agreed. Half of the stock (455 million shares) will be preferential shares open for public trade.
Families keep control
Next to the release of these voting-free shares, Porsche will also sell 12,5% of its stock, added with one share, to Porsche SE, the holding company above the Volkswagen Group, in the hands of the families Piëch and Porsche. This is a controlling minority share with blocking rights, which must keep the firm tied to the family structure and keep them empowered over the company their ancestor Ferry Porsche created in 1931.
There’s a conflict of interest here. It is beneficial for the families that the listing price of the shares remains as low as possible, but for the Volkswagen Group, it can’t be high enough. Therefore, the family members previously had to withdraw from voting on the Porsche IPO case.
No lack of interest
Volkswagen trades in a fraction of Porsche’s control for fresh funding for its electrification program and further development of connected and autonomous driving technology. Cutting Porsche partially loose must also leverage the performance of the Volkswagen Group at the stock exchange.
At the current trading price, that value now is roughly 80 billion euros, or more or less the same as what the smaller entity Porsche is deemed worth and ten times less than competitor Tesla, which is also ten times smaller in volume.
With that estimated value of 75 billion euros, the IPO of Porsche might turn out to be the biggest in Europe’s history. There’s no lack of interest before the official trade. American investor firm T Rowe Group, Qatar Investment Authorities, the owner of French luxury group LMVH, Bernard Arnault, and Dietrich Mateschitz, founder of Red Bull, have already expressed their interest.
As for Red Bull, a tight partnership with Porsche was pending for re-introducing the latter in Formula 1. But last month, both parties announced that the deal fell through. So it is not known yet if the German sports car brand will proceed on its own.
While trade at the stock exchange may be stumbling, Porsche is still in a prosperous condition. The manufacturer of luxury and sports cars sold 11% more cars last year, in a complex context of microchip shortages, while the operating margin had risen to 16,5 percent. For Oliver Blume, CEO of the Volkswagen Group and Porsche, the IPO will be his first significant achievement while in reign. He called it “historical”.