IPO To Provide Fresh Funding For The Development Of EVs

Volkswagen and Porsche Automobil Holding SE, the Porsche family holding and the company's largest shareholder, announced their intention to proceed with the IPO of Porsche AG.

  • On Monday, the boards of Volkswagen and Porsche Automobil Holding SE agreed to proceed with the IPO which is set to be the largest in German history and largest in Europe since 1999
  • The listing could happen as early as the end of September, early October

According to market analysts, the IPO may be valued at between €60 billion and €85 billion. Accordingly, the IPO might raise more than €10 billion.

  • The listing would give VW fresh capital to support its aggressive push into EVs, the manufacturing of batteries, and the development of new technology such as self-driving cars
  • The IPO discussions show how automakers are trying to raise money to finance the shift to electrification

“The listing of Porsche AG will give fresh tailwind to Volkswagen’s transformation,” said Arno Antlitz, VW Chief Finance Officer

Porsche Family To Keep Control On The Company

The Porsche listing has been set up to keep voting stock for the Porsche family through Porsche Automobil Holding SE and Volkswagen, in which the Porsche family holds a majority stake. Nonvoting shares will be placed on capital markets for outside investors at the IPO.

According to Ingo Speich, head of sustainability and corporate governance at Deka Investment, the setup "is primarily about securing the family as an anchor shareholder in Porsche. [...] The family wants to maintain control over the situation."

  • According to talks on the IPO published in February, the share capital of Porsche AG is to be divided equally between nonvoting preferred shares and voting ordinary shares
  • Up to 25% of the nonvoting preferred shares, i.e. 12.5% ​​of the total capital, are to be placed on the capital market at the IPO
  • Additionally, Porsche Automobil Holding SE will purchase 25% plus one share of the voting ordinary shares, the deal will give the family holding a blocking minority in Porsche AG

A Challenging Timing For An IPO

If the nonvoting preferred shares generate sufficient interest despite the weak market environment, this would be by far the largest IPO in Europe since 1999.

However, investors are criticizing the timing of the IPO because of the worsening energy crisis and a possible slump on the stock markets.

An insider commenting on VW's decision to go ahead with the Porsche IPO plans said: “It would be the technical go-ahead, nothing more [...] It’s paving the way, but this would not guarantee that the stock market bell will ring in the end.”

  • Advocates of listing Porsche point to the successful listing of Ferrari NV, the Italian sports car manufacturer that debuted on the NYSE in 2015
  • Analysts claim that Porsche has a successful, expanding business with strong profit margins, a well-known brand worldwide, and a clear path to becoming a manufacturer of EVs

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

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