GERMANY: Volkswagen (VOWG_p.DE) on late Monday announced its intention to float sports car brand Porsche, triggering what could become one of the world’s largest listings even as record inflation and a Russia-Europe energy standoff have sent European stocks tumbling.
In light of the significant market turmoil brought on by the intensification of the energy conflict between Russia and Europe, Volkswagen’s (VOWG p.DE) leadership met on Monday to decide whether to move forward with the much-awaited listing of Porsche.
The automaker declared its “intention to float” for an IPO in late September or early October, to finish by the end of the year. Still, it warned that the timing and listing were “subject to future capital market developments.”
To appeal to Porsche’s devoted following, the aim to float is anticipated to include an offering to retail investors in nations across Europe, including France, Spain, and Italy.
The biggest IPO in the history of Germany
The IPO may be the biggest in German history and the biggest in Europe since 1999 if investors value the sports car brand at the upper end of forecasts, which range between 60 and 85 billion euros ($60-$84 billion).
Qatar will be a cornerstone investor who plans to give the newly listed company a 4.99% ownership.
Only 12.5% of Porsche’s stock will be sold on the open market under the framework agreement reached between the two sides in February in the form of a future listing. Still, estimates show that even that might bring in up to 10.6 billion euros.
TIMING Volkswagen said an IPO would be a significant step in the company’s transformation. It aims to build out its software and electric vehicle offering.
Porsche is profitable for the Volkswagen Group because of its standing as a luxury brand that can raise pricing.
Its operating profit jumped 22% in the first half of this year, in contrast to an 8% fall in the mass market-oriented Volkswagen brand.
Arno Antlitz, head of finance and COO at Volkswagen, reaffirmed the automaker’s claim that a listing was essential to financing its 52 billion-euro transition to electrification in a Monday internal interview.
The Volkswagen Group benefits financially from Porsche’s status as a niche luxury brand with the power to raise prices.
During the first half of this year, Porsche’s operating profit increased by 22% , while the Volkswagen brand, which caters to mass markets, had its operating profit decline by 8%.
If the initial public offering is successful, Volkswagen will convene an extraordinary general meeting in December to propose a special dividend of 49% of the proceeds to shareholders to be distributed in early 2023.
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