The Volkswagen Group wants to take its sports car subsidiary Porsche AG public. The Wolfsburg-based group said it was in advanced negotiations with VW's main owner, Porsche SE. A cornerstone agreement has already been negotiated, which should prepare the way for the next steps. However, a final decision has not yet been made. The conclusion requires the approval of the board of directors and the supervisory board of both companies.
It is also unclear whether a possible IPO will be further examined at all. After all, it is also subject to the approval of the committees and the "general market development," it said. Porsche SE also confirmed that talks were at an advanced stage and stated that the transaction could also include the acquisition of ordinary shares in Porsche AG. Indications of an imminent placement by Porsche had already accumulated in the past few weeks.
IPO could be one of the largest in the world
However, for a long time there was the question of whether the Stuttgart-based major shareholder Porsche Automobil Holding SE would play along. This is not to be confused with the sports car manufacturer itself, which is located under the VW group umbrella. Instead, the holding company, the Porsche and Piëch families, bundles their shares in the group network, which own almost 32 percent of all shares and a good 53 percent of the voting rights in Volkswagen. The state of Lower Saxony, which owns 11.8 percent of the shares and 20.0 percent of the voting rights, also has a major influence.
There has been speculation for months about a possible IPO of the VW sports car subsidiary Porsche, which is considered to be particularly profitable. The potential of what is probably the best-known sports car brand in the world is huge, as its competitor Ferrari shows. The Italian carmaker has been on the New York and Milan stock exchanges since 2015 and has since increased the value of its shares by more than 300 percent. Ferrari currently has a market capitalization of almost 36 billion euros.
In addition to Audi, Porsche is considered the biggest profit maker in the Wolfsburg VW group. The profit last year could be five to six billion euros. Should the IPO go ahead, it would be one of the largest in the world. Investment bankers assume that Porsche AG will be valued at between 60 and 80 billion euros. According to some analysts, it could even be 100 billion euros or more. This would put Porsche AG almost at the value of VW, which is currently around 113 billion euros. The parent company should thus receive considerable financial resources if it were to sell the shares in its sports car subsidiary via a classic initial public offering (IPO).
Stocks are going up
This is one of the reasons why Volkswagen preferred shares jumped by nine percent after the announcement. Recently, the rumors had repeatedly caused short price swings and gave tailwind to the weakening VW share. The shares of Porsche SE also rose sharply by around ten percent. Despite the poor market environment, both stocks have at times reached a high since mid-January. According to an insider, Volkswagen is likely to pay out a special dividend to shareholders as part of the IPO.
It remains unclear what VW will use the fresh capital for. Experts assume that the carmaker wants to invest the money raised in electromobility. In addition to the financial advantages, Porsche CFO Lutz Meschke sees the disclosure of the market value as a better visibility for Porsche than in a multi-brand group. In addition, the IPO would give Porsche SE the opportunity to acquire shares in the sports car subsidiary. So far, the families have only been indirectly involved in this via the holding company. In the event of an IPO, the owner families would once again have direct access to Porsche AG, which went to Volkswagen after the takeover battle ten years ago.
However, it remains to be seen whether the deal will finally go through. Among other things, this also depends on the stock market environment, which has deteriorated significantly as a result of the Ukraine crisis. In its ad hoc announcement to investors, Volkswagen announced that it was just as open as its content whether a cornerstone agreement would ultimately be concluded.