Although the valuation of 70-75 billion euros announced on Sunday is somewhat below the 85 billion euros estimated by some investors, it is still close to Volkswagen’s own market capitalization of 88 billion euros, and far exceeds that of other German car manufacturers, such as BMW with 49 billion euros or Mercedes- Benz’s value of 61 billion euros. Although the IPO could be withdrawn before the start of trading on September 29, Lutz Meschke, Porsche’s chief financial officer, said in early September that this would only happen if there were serious geopolitical problems.
The shares of Volkswagen’s largest shareholder, Porsche Holding SE, are up 2.2 percent today.
Volkswagen shares are up 0.6 percent.
According to the announcement, the valuation of the share and the ownership rights will be as follows:
- Volkswagen said on Sunday night that it would value the preferred shares in Porsche AG’s IPO at a price of between 76.50 and 82.50 euros per share.
- The automaker plans to place up to 12.5 percent of Porsche’s share capital with investors in the form of non-voting preferred shares.
In accordance with the agreement between Volkswagen and Porsche at the beginning of September, Porsche will acquire 25 percent of the sports car brand, as well as one common share with voting rights at the price of the preferred shares increased by a 7.5 percent premium.
The total revenue from the sale is expected to be around 18.1-19.5 billion euros.
Investors who committed themselves long before the publication of more precise details already claim nearly 40 percent of the offered share capital:
- The Qatar Investment Authority, Volkswagen’s third largest shareholder, took a 4.99 percent stake, while
- the Norwegian sovereign wealth fund and T. Rowe Price (TROW.O) buy shares worth 750 million euros,
- And Abu Dhabi plans to buy shares worth around 300 million euros.
Porsche’s IPO is likely to be a success… investors are lining up. If the Porsche IPO goes well, it is possible that the [Volkswagen-csoport] its other brands, such as Audi, can also be listed
– said automotive industry expert Arndt Ellinghorst from the data analysis company QuantCo.
Analysts compared Porsche’s shares to Ferrari, whose market capitalization is 38 billion euros, but at the same time, the Italian manufacturer’s operating margin of 24 percent is much higher than the 17-18 percent achieved by Porsche. The German automaker is now aiming for a 20 percent margin, but it is important to note that it is far ahead of the famous Italian brand in the field of electric vehicles.
At the same time, some investors have expressed concern over Porsche’s rather complex management model, which is seen as problematic, as CEO Oliver Blume runs the sports car company and the Volkswagen Group at the same time.
The subscription period for private and institutional investors is expected to run from September 20 to September 28, with shares being offered to private investors in Germany, Austria, Switzerland, France, Italy and Spain.
Cover image: Shutterstock