The IPO of Porsche AG, which is planned for the end of September, is one of the largest IPOs in Europe in recent years. The estimated issue proceeds are more than ten billion euros. The income should primarily flow into important investments. What is the background of the plans?
Who is behind the IPO?
The parent company is the car group Volkswagen, which currently owns 100 percent of Porsche AG. In the VW portfolio with brands such as Audi, Seat, Skoda or the luxury cars from Bentley, Porsche plays an important role as a source of income. Porsche SE, the holding company of the Porsche and Piëch families, is the co-owner behind Volkswagen.
Porsche SE holds a majority of the ordinary voting shares in Volkswagen and has a total stake of almost 32 percent. The state of Lower Saxony is the second largest VW shareholder with 11.8 percent. In addition, the Emirate of Qatar holds 10.5 percent of the carmaker.
How did the special group structure come about?
Porsche and Volkswagen are linked by decades of shared history between the two founding families, Porsche and Piëch. Born in 1875, Ferdinand Porsche designed the car for the National Socialists on which Volkswagen built its success after the Second World War: the VW Beetle.
In 2005, Porsche joined VW and became the largest shareholder before Lower Saxony. The original reason was to make a hostile takeover of VW more difficult. After a further increase in Porsche's stake in VW in the years that followed, Porsche's investment business was spun off into a separate company, Porsche Vermögensverwaltung AG. It then became Porsche Automobil Holding SE (Porsche SE for short).
In the years that followed, Porsche's attempt to completely take over the VW group failed. The Porsche and Piëch families finally agreed to form an integrated car company. Volkswagen took over parts of Porsche AG, with the operative business of the automaker. In 2012, the sports car manufacturer was then completely sold to VW. The Porsche Holding, which is in the hands of the Porsche and Piëch families, was the majority owner of VW and became the umbrella of the entity that reunited Porsche and Volkswagen.
Why is Porsche AG going public?
The Porsche AG parent company VW wants to shoulder the necessary investments for the coming years with the proceeds from the IPO. With the hoped-for proceeds from the placement of preferred shares, Volkswagen plans to achieve its goal of establishing itself as a leading provider of electric cars, digitization and connected services. This includes, above all, massive investments in the battery business. The Wolfsburg are currently looking for partners for this.
At the same time, however, the Porsche and Piëch families want to regain more direct access to the Porsche car manufacturer by restructuring their shares and going public. It is planned that their family holding company Porsche SE will hold 25 percent plus one common share in the sports car manufacturer. This would give it a blocking minority and enable it to directly block important decisions for the company – and not only exert its influence indirectly, as is the case today, through its stake in the VW group.
When is the first issue planned?
The IPO is planned for late September or early October. By the end of the year at the latest, the walk onto the floor should be completed. According to those involved, the exact dates and modalities depend on the overall situation on the financial market.
How exactly does the IPO work?
In the run-up to the announcements, the shares in Porsche AG were divided equally into non-voting preferred shares and voting ordinary shares. Now that the VW supervisory board has given the go-ahead for the IPO of the sports car subsidiary Porsche AG, up to 25 percent of the non-voting preferred shares are to be placed on the stock market. This corresponds to 12.5 percent of the share capital of Porsche AG, as the preference shares account for half of all shares in Porsche AG.
VW's major shareholder Porsche SE also wants to buy 25 percent plus one share of the voting ordinary shares in Porsche AG. After the IPO, Volkswagen would still hold 75 percent minus one share in Porsche AG. In addition, VW's major owner Qatar is said to be interested in becoming an anchor shareholder in the listed Porsche AG with almost five percent of the preferred shares.
In the event of a successful IPO, Volkswagen plans to invite shareholders to an extraordinary general meeting in December to vote on a special dividend of 49 percent of the total proceeds from the placement of preferred shares and the sale of common shares to shareholders. The special distribution is expected to be made early next year.
What is the scope of the IPO?
According to financial circles, VW and Porsche are aiming for a valuation of 60 to 80 billion euros. The sale of the preferred shares on the stock exchange would flush 7.5 to ten billion euros into VW's coffers for the issue.
What criticism is there?
The nested shareholding structure at Porsche SE, Volkswagen and Porsche AG means that at least at times there are double responsibilities and possible conflicts of interest. Market observers had previously criticized the mixing of responsibilities in the new construction now being targeted.
So, even after the IPO, Oliver Blume will, at least for the time being, be the head of Porsche and the head of the Volkswagen Group. The former VW CFO Hans Dieter Pötsch, who is considered a confidant of the Porsche and Piëch families, would also have a dual role as chairman of the supervisory board of the group and CEO of the Porsche holding company. Volkswagen had already stated that appropriate rules for solid "corporate governance" had been put in place.
What are the consequences for employees at Porsche?
According to the Volkswagen works council, it supports the timetable for an IPO for Porsche AG. Because the expected income should not least flow into the further conversion towards e-mobility and digitization, the step contributes to the future viability of the locations, according to the employee representation in Wolfsburg. The works council, which is represented on the VW supervisory board by its boss Daniela Cavallo, also positively assesses the planned special dividend for the shareholders and the agreed bonus of 2,000 euros for each employee in the company wage agreement and at VW Sachsen GmbH.
How does the financial market react to the stock market plans?
According to market observers, the billion dollar IPO could give a boost to further large transactions in the crisis-ridden year 2022 and beyond. The shares of Volkswagen and the major shareholder Porsche SE, both of which are listed in the DAX, posted significant gains on the day after the announcement of the IPO plans for the sports car subsidiary Porsche AG.
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