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Global Economy

The calculation behind the Porsche IPO

The individual parts are worth more than the whole – this stock market wisdom should also apply to Porsche and Volkswagen. That's what car expert Jürgen Pieper from Bankhaus Metzler assumes. "You can see that from the fact that the VW price increases with every speculation about a Porsche IPO."

Behind this is the assumption that a company like Porsche within the huge VW group does not get the value it actually deserves from investors. Auto analyst Pieper estimates that Porsche could achieve a market capitalization of 80 billion euros with an IPO alone. That's not much less than the stock market value of the entire Volkswagen Group, which is currently around 107 billion euros. From Pieper's point of view, Volkswagen is "grossly undervalued" anyway.

VW wants to remain the main shareholder

With an IPO, Volkswagen would put its premium brand in the shop window. For many industry experts, Porsche is the "pearl" in the VW group. The brand is a key source of income for the Volkswagen Group. Last night the management in Wolfsburg gave the green light, at least for a partial IPO of the Stuttgart sports car subsidiary. The Wolfsburg car company and its main owner Porsche SE agreed on the relevant key points.

Due to the complicated ownership structure, however, only part of the shares can be freely sold as so-called preferred shares. Volkswagen wants to remain the main shareholder of Porsche in the currently discussed construction.

What do the owner families Porsche and Piëch want?

According to the current status, half of Porsche's share capital is to be split into common and half preferred shares. Up to a quarter of the preferred securities could be traded publicly – based on the total amount of all shares, that would be a maximum of 12.5 percent.

The umbrella company Porsche SE, in turn, would receive 25 percent plus one share of the voting stock. Porsche SE is the center of power in the Wolfsburg-Stuttgart network. It holds a good 53 percent of the voting rights in the Volkswagen Group and is controlled by the Porsche and Piëch families.

Industry expert Pieper from Bankhaus Metzler believes that behind the spin-off from Porsche is also the will of the owner families to regain control of Porsche and to be closer to the sports car manufacturer's business. After all, Porsche was independent until it was taken over by Volkswagen in 2012.

Half industrial group, half luxury goods manufacturer

In a conversation with journalists today, VW Chief Financial Officer Arno Antlitz said that playing through the potential Porsche IPO was "an important milestone in the implementation of our new strategy." It is about strengthening the profile and value of the brand within the group. CEO Herbert Diess added that a separately listed Porsche AG could become more agile and better exploit its "entrepreneurial freedom".

For car expert Pieper, Porsche is half a large industrial company and the other half a luxury goods manufacturer. This makes the company less susceptible to cyclical fluctuations in the auto industry, for example when steel becomes more expensive or a sales market closes due to the current sanctions against Russia. "A Porsche 911 driver usually has so much wealth that rising inflation doesn't affect him," says Pieper.

Declaration of war on Tesla

Especially since the luxury sports cars are in great demand in the important sales market of China, while other brands from the Volkswagen Group such as VW and Skoda have recently recorded declining sales figures in China. Capital market expert Andreas Lipkow from Comdirect-Bank sees enormous growth potential in Porsche – especially with regard to electrification. Especially since every Porsche model is already available as an electric car.

Lipkow also suspects that the IPO is a declaration of war against the electric car pioneer Tesla, which, despite lower sales figures, is rated disproportionately higher than the Volkswagen Group. And that despite the fact that Volkswagen sells up to 10 million cars a year, about ten times as much as Tesla.

Money for the electric offensive

If the thesis is correct that the individual parts are worth more on the stock exchange than the whole, Volkswagen and Porsche could each bring a significantly higher market value to the floor than they do now. Lipkow believes that the additional capital should then continue to flow into electrification and expansion.

Porsche's IPO is already planned for the fourth quarter of this year. Whether this actually happens also depends on the stock market environment, which has just deteriorated as a result of Russia's attack on Ukraine.

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