Porsche now “at full speed” for a historic IPO

And so, finally, it begins. Porsche’s long-awaited IPO, widely expected to be one of Europe’s largest, was officially announced by its parent company, Volkswagen AG, on Monday evening. Despite choppy market conditions, the manufacturing giant has confirmed that it plans to list a minority stake in the famed automaker. Up to 25% of non-voting “preferred shares” would be offered in the IPO, which is expected by the end of September or early October, with listing on the Frankfurt stock exchange being finalized by the end of the year.

“We warmly welcome the decision of Volkswagen’s Supervisory Board in favor of an IPO of Porsche AG,” said Oliver Blume, Chairman of the Executive Board of Porsche AG. “This is a historic moment for Porsche. We believe that an IPO would open a new chapter for us with increased independence as one of the most successful sports car manufacturers in the world. It would strengthen our ability to continue to execute our strategy.

Although PH does not claim to understand the minutiae of the IPO itself – it does include the splitting of Porsche AG’s share capital into 50% “preferred shares” and 50% “ordinary shares”, and features apparently 25% plus a blocking minority of these for the Porsche and Piech families through Porsche SE – several goals are targeted with the share transfer.

One of them, clearly, is the increase in entrepreneurial independence (in the words of Porsche). The manufacturer wants to “unleash its full potential by relying on its many assets”. Among these, he lists brand strength, racing heritage, structural growth, customer experience, battery-electric technology and compelling financial performance. And when he targets group revenues of 38 to 38 billion euros for the year 2022 alone, it is easy to understand how investors have come to expect a valuation as high as 85 billion euros.

“We believe that Porsche is well positioned and will continue to focus on exclusive and high-quality products, electromobility and sustainability,” said Lutz Meschke, Deputy Chairman of the Board of Management. “Therefore, I’m optimistic that we could attract a very strong and well-diversified shareholder base with the IPO.”

Among that base is believed to be the Qatar Investment Authority, which has agreed to take a 4.99% stake in the newly listed company, subject to an agreement. The preferred shares will be offered to retail investors in Germany, Austria, France, Italy, Spain and Switzerland, although Bloomberg reported that Porsche had “earned interest” from billionaires on the continent, tipping the founder of Red Bull, Dietrich Mateschitz, and chairman of LVMH. Bernard Arnault as well-known potential investors.

Of course, when Porsche speaks of β€œindependence”, it means from Volkswagen AG. Therefore, as part of the IPO, the dominance agreement that dictates the transfer of profits and losses to its parent company would be terminated by the end of the year. It will be replaced by an “industrial cooperation agreement” which would seek to maintain “their fruitful cooperation and expects to continue to benefit from joint synergies in the future” – but it would be conducted “on an arm’s length basis”.

For its part, the advantage of β€œmoving at full speed” for Volkswagen AG is the additional investment it needs to keep moving forward in its strategy of electrifying everything that moves. Its own hugely ambitious plans are unfolding on a large scale, and while there are question marks over listing its main source of operating profit in less than favorable market conditions, an IPO successful would bring in the considerable funds it needs to prepare for life after 2035. Whether or not that will happen remains to be seen. Either way, the β€œIntent to Float” notice is the first step into an entirely new era for both companies.

Porsche now “at full speed” for a historic IPO

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