Dusseldorf Volkswagen is resolutely pushing ahead with a possible IPO of its Stuttgart sports car subsidiary Porsche. In a few days, the VW supervisory board is to make a fundamental decision with which the corresponding preparations can be made. The matter is “ready for a decision”, it was said on Tuesday from company circles.
As Volkswagen also announced, the Wolfsburg-based group had negotiated a key agreement with Porsche SE “which should form the basis for further steps in preparation for a possible IPO”. Porsche SE – not to be confused with the sports car manufacturer Porsche AG, whose IPO is now being prepared – is the Stuttgart holding company in which the Porsche-Piëch family has bundled its shares in the VW group. The family holds 53 percent of VW voting rights, making it the most influential shareholder in Wolfsburg.
The key points agreement takes into account the interests of the most important Volkswagen shareholder groups, the group said. It is therefore considered certain that the supervisory board will make the fundamental decision to prepare for the Porsche IPO in a few days. Volkswagen has already brought in large banks and law firms to prepare.
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Actually, according to circles, the decision on the key issues paper should have been made on Monday. However, there were questions from the major shareholder Qatar, which are now to be answered. The supervisory board intends to meet shortly and adopt the key issues paper, it was added.
According to the base scenario, 20 to 30 percent of Porsche AG shares are to be listed on the stock exchange. As with the Volkswagen Group, there will probably be both ordinary and preference shares. The owner family could have a right of first refusal with their Porsche Automobil Holding SE. As a result, she would significantly increase her power at the sports car manufacturer through the double participation in Porsche and Volkswagen.
Shares in Porsche SE and VW increase significantly
After Volkswagen published its ad hoc announcement in the morning, VW shares rose by almost ten percent by mid-morning. The stock of Porsche SE, which is also listed, also benefited significantly; the share price rose by more than eleven percent.
After the possible IPO, the previous Porsche share held by the main VW shareholders, the Porsche-Piëch family, the state of Lower Saxony and the Qatari state holding company, would be diluted a bit. The cornerstone agreement guarantees that there will be a certain amount of compensation for this, according to additional information from group circles.
Volkswagen is expected to pay a special dividend to shareholders as part of the IPO. The Volkswagen Annual General Meeting had already made a corresponding decision in principle last summer. This would give Porsche SE the opportunity to acquire shares in the sports car subsidiary because a large part of the special dividend would be distributed to Porsche SE.
The agreement also takes into account the interests of the influential employee representatives on the VW supervisory board. For the works councils, it is crucial that no jobs are jeopardized by an IPO.
The Volkswagen Group Board of Management also gets the assurance that the expected billions in proceeds from a Porsche IPO can be invested in the electric offensive. The construction of the planned six new battery cell plants in Europe alone is likely to cost around 20 billion euros.
>>Read more about this: VW is pursuing these plans for battery production
There are still uncertainties about the exact modalities of a Porsche IPO. In any case, the VW group should retain a majority stake in the Stuttgart sports car manufacturer. This guarantees the approval of the employee representatives for the planned IPO.
Going public should above all raise the hidden value of the Stuttgart sports car manufacturer. The entire Volkswagen Group currently has a market capitalization of a good 100 billion euros. Porsche alone could be worth at least 50 to 60 billion euros, in the best case maybe even up to 100 billion euros, the company said.
“It brings in a lot of money for the various shareholders”
If the Volkswagen supervisory board decides in principle to go public with Porsche in a few days, there is still no guarantee that it will actually happen. “Of course, that depends on the global stock market environment,” said a group insider. Now it’s all about creating the legal basis for an IPO. The uncertain situation in Ukraine and possible global interest rate increases are influencing factors that could possibly stop Porsche from going public. The basic rule of the financial markets also applies to Porsche: there will only be a listing if the stock market environment is generally positive.
However, the probability of an IPO is high. “That brings the various shareholders a lot of money,” said car expert Arndt Ellinghorst from Quantco and long-time observer of the VW group. The logic of an IPO is “imperative” because VW is taking advantage of Porsche’s high earning power, Ellinghorst continued. He expects that the IPO will come in the second half of the year.
Porsche SE confirmed the advanced talks. Even if the supervisory bodies involved agree, the execution of the transaction is still subject to further reviews and general market developments.
“Of course we register that there is great interest from the public and in the markets. The decision on this lies solely with the Volkswagen Group,” Porsche boss Oliver Blume recently explained in an interview with the Handelsblatt.
After an IPO, the owner families would regain access to Porsche AG, which had gone completely to Volkswagen after the lost takeover battle ten years ago. The family still has a strong emotional bond with the sports car manufacturer because it forms the core of their automotive empire.
More: The Porsche/Piëch family is examining the sale of part of their stake in VW – in order to put the money into Porsche