The moment has come.
Volkswagen (VLKAF) will grant independence to its iconic brand Porsche despite the upheavals currently shaking the markets due to uncertainties about the state of the health of the world economy in the grip of record inflation.
The sports car brand on Sept. 29 will therefore be listed on the stock market, Volkswagen announced on Sept. 18 in a press release. It will be on the Frankfurt Stock Exchange in Germany.
For this transaction, the German giant wants to raise between 8.71 billion euros and 9.39 billion euros ($8.71 billion up to $9.4 billion). The automaker will price the preferred shares of Porsche between 76.50 euros and 82.50 euros per share, which will translate into a valuation between 70 billion euros and 75 billion euros ($70.1 billion and $75.1 billion).
Third Largest IPO in Europe?
At the upper end of the range, it would be the third largest IPO in Europe after Refinitiv.
Despite the current market turmoil, some major investors have already confirmed they will participate, Volkswagen said. Qatar Investment Authority, the sovereign wealth fund of Qatar, ADQ (trusted partner of the government of Abu Dhabi), Norway's sovereign wealth fund, mutual fund company T. Rowe Price will subscribe up to 3.7 billion euros worth of preferred shares.
"We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors,” Volkswagen Chief Financial Officer and Chief Operating Officer Arno Antlitz said.
The IPO also marks the return to business of the Porsche-Piech family, which lost control of the sports car brand several years ago. Indeed, the family will acquire 25% plus one Porsche common shares with voting rights, while investors will be able to acquire 25% of the Porsche preferred shares which do not have voting rights.
All this means that the Porsche-Piech family will have a blocking minority stake, which would allow them to influence strategic decisions at a time when Porsche is determined to compete fiercely with Tesla (TSLA) in the segment of premium and luxury electric vehicles.
The Family Is Back
The Porsche-Piech family will acquire its 25% with a premium of 7.5% and will finance the operation with debt capital of up to 7.9 billion euros, it said in a separate statement.
Volkswagen plans to use part of the proceeds of this deal - between 18.1 billion euros and 19.5 billion euros - to finance its offensive in electric vehicles and the development of its technologies, in particular autonomous.
The German manufacturer wants to invest 89 billion euros to developing EVs over the next five years. Its other ambition is to see sales of electric vehicles represent a quarter of the group's total sales beginning in 2026.
For the moment, the group sells far fewer electric vehicles than Tesla, the world's No. 1 in the sector.
Volkswagen also hopes that by breaking away, Porsche will have a freer hand to more sharply compete with Tesla and other luxury electric-vehicle makers like Lucid (LCID) .
In 2021, Porsche sold 301,915 vehicles, with 41,296 (less than 14%) being the all-electric Taycan. The EV sold more than the sports car icon Porsche 911 (38,464 units). The automaker wants 80% of its sales to be EVs by 2030.