Porsche: Volkswagen supervisory board approves IPO

Dusseldorf, Frankfurt The shares of the sports car manufacturer Porsche could be traded on the stock exchange in a few weeks. The Volkswagen supervisory board approved the stock market plans of its profitable Stuttgart subsidiary late Monday evening, as the group confirmed in Wolfsburg. Porsche could become one of the largest European IPOs. A valuation of up to 80 billion euros is possible.

As the VW Group explained further, the Management Board and Supervisory Board have jointly decided to aim for the planned first listing for the end of September or the beginning of October. This starts the so-called “intention to float”, as the term is used on the financial markets. However, the restriction still applies that the final decision on the IPO is made dependent on “further capital market developments”. “The IPO of Porsche AG would give the transformation of Volkswagen a noticeable tailwind,” said VW CFO Arno Antlitz.

“This is a historic moment for Porsche,” says Porsche CEO Oliver Blume. “We believe that an IPO would open a new chapter for us with greater independence than one of the world’s most successful sports car manufacturers. We would have the opportunity to continue successfully implementing our strategy.”

The family holding company Porsche SE is also behind the stock market plans of the automaker of the same name. The executive board and supervisory board of the Stuttgart holding company, in which the Porsche-Piëch family has bundled its shares, also gave their general approval to the stock exchange plans in the evening. The holding wants to continue the transaction “and enter the next phase of preparations,” it said in the evening. Porsche SE – and ultimately the family – would benefit from the IPO because a larger block of shares in the sports car manufacturer is to be offered to it as part of the IPO.

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However, the general approval of the Porsche IPO by the VW supervisory board does not mean that it will definitely happen. The final decision will not be made until the next few weeks with the pricing process among investors, which would also determine the final market capitalization of a future listed Porsche AG. 60 billion euros are considered the pain threshold. If the Porsche market value is lower, Volkswagen could still stop the stock market plans.

In recent years, the Volkswagen Group has repeatedly had to make painful experiences with its IPO plans, most recently with the Traton truck division, whose shares have been traded on the stock exchange for a good three years. After the VW group had initially announced a Traton partial IPO, the plans were rejected after a few weeks. A few weeks later, the IPO took place, but only with ten percent of the Traton shares.

From a compliance point of view, the planned IPO of Porsche entails major complications. Because a number of top managers from Volkswagen also hold important positions at Porsche SE. This also applies to a number of representatives from the supervisory boards, especially the Porsche-Piëch family, which is strongly represented both in the supervisory body of the Volkswagen Group and in the PSE. The problem: The VW Group as the seller is actually interested in a high selling price for the Porsche shares. On the PSE side, the exact opposite applies, the family holding company wants to pay as little as possible.

Volkswagen and Porsche have therefore obtained a number of legal opinions in order to avoid conflicts of interest and possible subsequent shareholder lawsuits. In addition, the family representatives did not take part in the vote on the IPO at the VW supervisory board meeting on Monday. The same applies to VW Supervisory Board Chairman Hans Dieter Pötsch, who is also CEO of Porsche SE.

On the other hand, most of the trade union officials and the representatives of the state of Lower Saxony are unaffected. Porsche works council chief Werner Weresch was also not allowed to vote because of possible conflicts of interest. The two representatives of the Qatari state holding company are also unlikely to have taken part in the vote. The emirate is likely to take over a larger part of the Porsche shares as an anchor shareholder.

After initial skepticism, investors’ approval of Porsche’s stock market plans is now growing. “We have confidence in the IPO,” said Daniel Röska, automotive analyst at US investment firm Bernstein. The final assessment of Porsche before an official IPO plays a crucial role. “The lower the rating, the better it is for the Porsche SE family holding company and the worse it is for Volkswagen,” Röska continued.

Oliver Blume

The VW supervisory board has approved the IPO plans for Porsche.

(Photo: imago images/ZUMA Wire)

With the official announcement of the IPO, which could become the largest IPO in Europe for more than ten years, the usually four-week marketing phase begins. First, the Porsche management advertises to potential shareholders in road shows for around two weeks, then a stock market prospectus including a price range for future Porsche AG shares is published.

In the following two weeks, investors can then bid for Porsche shares in what is known as bookbuilding. At the end of this phase, the accompanying banks set the issue price and decide which bidders will receive how many shares. The car company confirmed in the evening that VW’s major shareholder Qatar should receive one of the largest allocations with 4.99 percent. At the beginning of October, Porsche shares could be traded on the Frankfurt Stock Exchange for the first time if the market environment does not deteriorate significantly. Private investors should also be able to purchase the Porsche paper.

>>Read the Handelsblatt interview hereas the new VW CEO Oliver Blume wants to continue to lead Porsche in personal union.

With the IPO, investors will only be offered a 25 percent stake in the non-voting preferred shares of Porsche AG. By simultaneously selling a 25 percent share of the voting ordinary shares to the Porsche Piëch family, the family intends to significantly expand their power at the sports car manufacturer. 75 percent of the tribes remain with the Volkswagen Group, in which the families currently hold 53 percent of the voting rights through their holding company Porsche SE.

The parent company Volkswagen could receive 15 billion from the sale of Porsche shares. However, VW wants to distribute around half of this as a special dividend, which should make it easier for the Porsche Piëch family to buy Porsche common shares. VW intends to invest the remaining proceeds in future projects ranging from battery technology to software.

On February 24, VW had already declared its intention to list Porsche in 2022 – exactly on the day that the Russian army invaded Ukraine. Since then, there has been uncertainty as to whether Volkswagen can even realize the plans. The high volatility on the capital markets meant that almost no companies dared to list in Europe this year.

In a volatile market, investors usually have to part with existing equity commitments at a loss before they have money available to buy new issues. Their appetite for newbies without a proven track record in the stock market is therefore limited. When it comes to new issues, the accompanying investment banks and consultants look at the volatility index, an indicator of the susceptibility of share prices to fluctuations. According to investment bankers, IPOs are considered feasible if the index is no higher than 20 to 25 points. It becomes critical about that. On Tuesday, the volatility in the Dax was just under 29.

More: Germany’s most profitable carmaker polishes up for the stock market.

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