Porsche is at the start: one of the largest IPOs in Germany is imminent
The largest European car company VW is putting its sports car on the stock market – and wants to use the proceeds to finance investments in electromobility.
At first the dates were still vague, but now there is unlikely to be a return: Porsche is scheduled to go public on September 29th. From then on, the Volkswagen subsidiary from Stuttgart will in all likelihood allow some of its preferred shares to be traded freely on the financial market. This was decided by the management and board of directors of the VW Group after meetings on Sunday evening.
For the start of the stock exchange in Frankfurt, the Wolfsburg-based company and the umbrella company Porsche SE (PSE) had previously generally aimed for the end of September/beginning of October. A specific day was initially not mentioned – the decision to go onto the floor was still subject to change due to the tense global economic situation.
VW expects gross proceeds of around 9 billion euros
However, the inspectors have already set the price range: the Porsche advantages are offered in a corridor between 76.50 and 82.50 euros per piece. The plan is to issue almost 114 million shares. This includes almost 15 million papers for a possible over-allotment, as the parent company VW further announced. If everything goes as planned and the actual asking price levels off in the range mentioned, gross proceeds of EUR 8.71 to 9.39 billion are expected.
The subscription period should begin on Tuesday, September 20th. It goes up to one day before the IPO, provided that the German financial regulator Bafin approves the securities prospectus. Private investors in Germany, Austria, Switzerland, France, Italy and Spain should also be able to purchase some of the Porsche benefits.
VW Group CFO Arno Antlitz sees a decisive step taken: “We are now on the home stretch with the Porsche stock market plans.” Public trading in shares in the sports car manufacturer, which has been brought up again and again for years, had been examined since February. The fundamental decision was made two weeks ago.
Porsche should be worth between 70 and 85 billion euros
Europe’s largest car group wants to tap additional sources of money. VW is planning further billions in investments in electromobility and digital from the proceeds. In addition, the car company itself hopes to become more attractive to investors. Several analysts recently estimated Porsche’s valuation at 70 to 85 billion euros. Other forecasts assumed 80 to 100 billion euros, but others were well below that. VW is currently worth a good 87 billion euros on the financial market.
Half of Porsche’s share capital has already been split into non-voting preferred shares and half with voting ordinary shares. Up to a quarter of the assets – about an eighth of all shares – are to go on sale soon.
911 million securities
At the same time, the PSE gets 25 percent plus one share in the tribes, so it has an influence on important decisions through a blocking minority. This step has now also been firmly agreed: the Board of Directors of PSE approved a corresponding purchase agreement. Depending on the form of the final conditions on the day of the IPO, VW and Porsche-Holding calculate gross proceeds of 9.36 to 10.10 billion euros for the common stock business. Included here is a surcharge of 7.5 percent on the benefits.
In total, the restructuring should result in 911 million individual securities – a kind of advertising gimmick with which Porsche alludes to its probably best-known model, the 911. The operational business with other series such as the Cayenne, Macan, Panamera or Taycan is bundled in the company. In contrast, PSE, controlled by the Porsche and Piëch families, holds the majority of the voting rights in Wolfsburg.
Qatar and Norwegian sovereign wealth fund as anchor shareholders
Most preference shares should not go to small but to large institutional investors. According to VW, Qatar wants to stock up on just under 5 percent. The Gulf Emirate is already the third most important shareholder in the entire group. Another anchor investor in the Porsche IPO is the Norwegian sovereign wealth fund, in which the central bank in Oslo manages the income from the country’s oil and gas reserves and wants to increase them for future generations. In addition, the US fund company T. Rowe Price and the state investment company ADQ from Abu Dhabi are investing in the Stuttgart-based company.
The Swabians are a pearl of returns in the Wolfsburg multi-brand group. Porsche boss Oliver Blume has also been in charge of the VW Group management since the beginning of September after Herbert Diess left. The company rejected criticism of the dual function with reference to its transparency and voting rules. These should be sufficient to avoid conflicts of interest. The same applies to VW Chairman of the Board of Directors Hans Dieter Pötsch, who also heads the PSE.
A special dividend beckons
In the event of a successful IPO, there will be an unscheduled Volkswagen general meeting in December. It is proposed to pay out a “special dividend in the amount of 49 percent of the total gross proceeds from the placement of preferred shares and the sale of common shares at the beginning of 2023,” explained VW.
The workforce should also benefit. The VW works council emphasized the agreed bonus of 2000 euros for all employees in the company wage agreement and in Saxony. The move also shows that Porsche and VW are investing in industry change and the future of jobs.
Cancellation of the IPO is unlikely
At least indirectly, however, the interests of the major VW owners also play a role in one of the largest IPOs in Germany. The Porsche/Piëch clan is said to want to regain more direct access to the sports car manufacturer with its name. In 2008/2009, Volkswagen was able to fend off a takeover attack by the then Porsche management. In the end, the Lower Saxony turned the tables and swallowed up the profitable subsidiary. In return, both families received a majority stake in the car giant.
It now seems increasingly unlikely that the listing could be called off in the short term. According to reports, however, there is a minimum evaluation threshold that VW definitely wants to achieve. In addition, dangers for the auto industry remain – new supply chain problems, the progress of the Ukraine war, inflation in energy prices and the end of the low interest rate phase are just a few. (dpa)