A Porsche AG Taycan Turbo S electric automobile at the luxury automaker’s development center in Weissach, Germany, on June 21, 2021.
Andreas Gebert | Bloomberg | Getty Images
Volkswagen shares rose slightly on Monday after the carmaker said it was targeting a valuation of up to 75 billion euros ($74.84 billion) for sportscar brand Porsche, in potentially Europe’s third biggest IPO ever.
Porsche aims to win over investors with its stable brand and high operating margins even as the stocks of other luxury carmakers like Ferrari and Aston Martin have suffered this year amid the tumult in European stock markets.
The valuation announced on Sunday of 70 billion-75 billion euros is slightly below some investors’ estimates of up to 85 billion euros, but still far outstrips the valuation of other German carmakers like BMW’s 49 billion euros or Mercedes-Benz’ 61 billion.
It also comes close to Volkswagen’s own market capitalization of 88 billion euros. The carmaker saw its shares rise 3% in premarket trade. By 0914 GMT they were only slightly higher at 145.6 euros, from 145.46 at Friday’s close, but bucked a drop in European shares.
While the IPO could still be pulled before trading starts on Sept. 29, Porsche AG’s Chief Financial Officer Lutz Meschke said in early September this would only happen in the event of new “severe geopolitical problems.”
Volkswagen, which analysts have said could see its own valuation bumped up by the listing through showcasing the worth of just one of its premium brands, saw its shares rise 3% in premarket trade but by 0838 GMT they were up just 0.4%, from Friday’s close.
Shares in Porsche Holding SE, Volkswagen’s largest shareholder, were 3.23% higher, topping Germany’s DAX blue-chip index.
Volkswagen said on Sunday night it would price preferred shares in the flotation of Porsche AG at 76.50 euros to 82.50 euros per share.
A prospectus with further details on the listing is expected to be published on Monday afternoon.
The carmaker plans on placing up to 12.5% of Porsche’s share capital with investors in the form of preferred shares, which do not carry voting rights.
Already, cornerstone investors have laid claim to almost 40% of the share capital on offer: Qatar Investment Authority, Volkswagen’s third-largest shareholder, has committed to buying 4.99%, while Norway’s sovereign wealth fund and T. Rowe Price will purchase shares worth 750 million euros, Sunday’s statement said.
Abu Dhabi’s ADQ will buy shares worth 300 million euros.
“The Porsche IPO will most likely be a success… investors are queuing up. If the Porsche IPO goes well, one could imagine placing other parts [of Volkswagen] such as Audi on the stock exchange,” auto expert Arndt Ellinghorst of data analytics firm QuantCo said.
Analysts have compared the Porsche AG stock to Ferrari, which has a market capitalization of 38 billion euros but an operating margin of 24% to Porsche’s 17-18%. The German carmaker is targeting a 20% margin and is far ahead in electric vehicles.
But some investors have expressed caution over complex governance issues at Porsche AG, with Chief Executive Oliver Blume running both the sportscar maker and the Volkswagen Group and Porsche SE retaining a significant stake.
The subscription period for private and institutional investors is expected to run from Sept. 20 to Sept. 28, with shares offered to private investors in Germany, Austria, Switzerland, France, Italy and Spain.
In line with Volkswagen’s agreement earlier in September with Porsche SE, 25% plus one ordinary share in the sportscar brand, which do carry voting rights, will go to Porsche SE at the price of the preferred shares plus a 7.5% premium.
Total proceeds from the sale will be 18.1 billion to 19.5 billion euros.