The tension is rising in Stuttgart. In a few weeks, Porsche AG will be listed on the stock exchange again after years. How the IPO works, what the parent company VW expects from it and what else investors should know about the IPO.
For Porsche it's the beginning of October at the latest: get on the floor. Both the board of directors and the supervisory board of the parent company Volkswagen voted for the debut in Frankfurt. Shortly before the outbreak of the Ukraine war, VW began preparing for the IPO. However, because the financial markets have reacted so inconsistently since then, Wolfsburg took its time with the examination.
Until now. Because now there is the green light for Porsche AG to become more independent again after many years under VW hands. The car manufacturer from Stuttgart has only been part of VW since 2009. The two owner families, Porsche and Piëch, had previously engaged in a bitter power struggle. At that time, Porsche wanted to take over the Wolfsburg group, but failed miserably and was eventually bought by VW itself.
Now the luxury sports car manufacturer should set things right for VW. In contrast to the VW group, Porsche works very profitably. More than 300,000 cars sold recently delivered an operating return on sales of a good 17.6 percent. The VW group managed only eight percent. Correspondingly self-confident, Porsche boss Oliver Blume said in an interview with "Capital" in spring: "Porsche is a strong brand with a robust business model, forward-looking strategy and a worldwide fan base." Blume is now also sitting in the executive chair at Volkswagen, his predecessor Herbert Diess had to vacate the post as CEO.
The great hope in Wolfsburg: The Stuttgart-based company's IPO not only brings them a good cash injection, but also increases the value of the ailing VW parent company. Volkswagen AG currently has a market value of 84 billion euros. That's just a tenth of what competitors like Tesla are worth, and means only a place in the middle in an international comparison.
With the "go" of the board of directors and the supervisory board, VW also announced its intention to go public ("intention to float"). The group now has to attract further investors within two weeks. According to VW CEO Blume, several of these talks are still pending. After that, the subscription period for investors ("bookbuilding process") begins. In this phase, the new Porsche security is placed at a predetermined price range and investors can bid for it. These orders are noted in a digital book. After one month at the latest, the issue price of the share is calculated from the bids submitted. Trading on the stock exchange usually starts the next day.
At Porsche, investors find a lucrative company with solid business and returns. The operative business of the car manufacturer is bundled in Porsche AG. Vehicle sales of models such as the 911, Cayenne or Panamera have increased almost every year since 2010. CFO Lutz Meschke said that Porsche could achieve an operating profit (EBIT) of 20 percent of sales in the long term.
The carmaker also wants to position itself for the future and is giving itself a green coat of paint with several electric models: the Cayenne and Panamera model series offer five plug-in hybrid variants, and the all-electric Taycan has eight versions.
Blume wants to significantly increase the proportion of e-cars. The group has set itself the goal that half of the new Porsche models will be electric by 2025. This is to be ensured by investments of more than 15 billion euros, which flow not only into electric drives, but also into digital transformation and sustainable production. The IPO is now intended to collect part of this money.
Interested investors must know that the conglomerate of the three companies remains tight. With positive or negative news about one of the three companies, fluctuations in the share prices of the others are also possible. The previous shares in the Volkswagen Group, Porsche SE (PSE) and Volkswagen AG, reacted differently to the announcement that Porsche AG would also be listed on the stock exchange in the future: While the Volkswagen share rose, the Porsche share lost -Holding company PSE in value.
The IPO of Porsche AG is one of the largest in Europe for years. The capital of the sports car manufacturer is to be divided equally between voting common shares and non-voting preferred shares. Up to 25 percent of these preferred shares should then be freely tradable for everyone. That corresponds to about one eighth of the total shares held by Porsche AG. The VW umbrella company PSE receives the 25 percent of ordinary shares plus another security of Porsche AG. In this way, she secures a blocking minority and continues to have the greatest influence on Porsche's business.
VW investors do not automatically have the new Porsche AG shares booked in their securities account. Indirectly, however, they should benefit from the IPO via a planned dividend payment. "In the event of a successful IPO, Volkswagen AG will convene an extraordinary general meeting for December 2022," VW said. It should be proposed to shareholders "to distribute 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 to shareholders in early 2023".
The aim of Blume and VW is to achieve the highest possible valuation of the company for the IPO. Observers and industry experts expect Porsche AG to be valued at between 60 and 80 billion euros. The sale of the preferred shares, which are tradable for all investors, would bring in 7.5 to 10 billion euros. If investors rate Porsche significantly lower, VW should take a little more time and postpone the IPO. The group has kept a back door open for this and announced that it is planning the IPO "subject to further capital market developments".
The article first appeared on Capital.de.
