Boost for European market with Porsche IPO to raise up to $9.4 billion for parent company VW

Volkswagen AG is seeking to raise up to 9.4 billion euros ($9.4 billion) from the IPO of its iconic sports car maker Porsche AG in what could be the largest ever public listing. Europe for over a decade.

The German automaker said on Sunday evening it was seeking a valuation of 70-75 billion euros for the listing, below a previous target of 85 billion euros, with the deal continuing at a time of deep market disruption. European markets were largely closed to IPOs for most of the year, with companies reluctant to seek new listings due to the region’s energy crisis, rising interest rates and record inflation.

Porsche is not alone in lowering its valuation targets, Intel Corp. lowering expectations for its Mobileye IPO.

Amid the stock market crash, the listing project is boosted by firm commitments from key investors. Qatar Investment Authority, the Norwegian sovereign wealth fund, T. Rowe Price and the ADQ are expected to subscribe for preferred shares of up to 3.7 billion euros, the manufacturer said.

“We are now in the home stretch with Porsche’s IPO plans and welcome the commitment of our major investors,” said VW chief financial officer Arno Antlitz. The offer period will begin on September 20 with an expected start of trading on September 29.

Volkswagen preferred shares rose 1.4% in Frankfurt and 0.4% at 10:15 a.m.

In meetings with potential investors, VW touted the listing as a chance to invest in a company that combines the best of automotive rivals like Ferrari NV and luxury brands like Louis Vuitton. While Ferrari and Porsche both target wealthy buyers, the Italian automaker remains in a category of its own, posting industry-leading margins and achieving a fraction of Porsche’s 300,000 annual sales.

At the preferred stock’s midpoint valuation, the IPO would value Porsche at 10.2 times earnings before interest, taxes, depreciation and amortization, according to Jefferies. This compares to Ferrari’s EBITDA multiple of 23.1 times. Yet Porsche’s higher valuation almost matches VW’s total market value – including Audi, Skoda, the VW brand as well as Seat, among others – of 88 billion euros.

Porsche is aiming for revenue of up to 39 billion euros this year and a return on sales of up to 18%, up two points from last year, the company said in July. Yields are expected to climb above 20% over the long term.

As well as giving investors a slice of one of the auto industry’s most recognizable names, the IPO will return significant decision-making power to the Porsche-Piech family, which has lost control of the carmaker. sports cars over a decade ago after a long takeover battle with VW. To accommodate the interests of the billionaire family, which owns 53% of VW’s voting shares through separately listed Porsche Automobil Holding SE, Porsche’s IPO is complex and has raised governance issues that reflect those concerning the convoluted structure of VW.

Investors will be able to subscribe to 25% of the preferred shares of Porsche, which carry no voting rights. The family will buy 25% plus one of Porsche’s common shares with voting rights, meaning they will receive a blocking minority stake and influence future key decisions. The family has agreed to pay a premium of 7.5% on top of the price range for the preferred shares and plans to finance the acquisition with a mix of debt capital of up to 7.9 billion euros and a special dividend paid by VW.

Proceeds from the deal will help VW fund its electric vehicle transition and software investments, the automaker said.

Although interest in the IPO has been high, some investors have said the appointment of Oliver Blume, chief executive of Porsche, to lead VW raises questions about Porsche’s future independence, as well as a small float of 12.5%, they say.


Yet an IPO of this size is so rare in Europe that it can defy the general market downturn, with portfolio managers forced to scrutinize the candidate as it will automatically enter major equity benchmarks. the region, people attending the meetings to drum up interest in selling shares said.

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