Porsche defies the crisis and will go public with a valuation of 85,000 million

Green light for Porsche IPO.

Thomas Osborne
Thomas Osborne
06 September 2022 Tuesday 15:32
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Porsche defies the crisis and will go public with a valuation of 85,000 million

Green light for Porsche IPO. The Volkswagen group (VW) has given its approval to the operation this week. The Stuttgart firm will start trading at the end of this month or in early October, depending on market conditions. It is one of the largest IPOs that have ever taken place in the Old Continent and the largest since 1999.

The luxury brand is valued at 85 billion euros: more than double that of Ferrari, but ten times less than Tesla. With this figure, it would have almost the same value as its parent company (which sells ten million vehicles a year, when Porsche only sells 300,000).

The decision to go public was announced on February 24, the day after the invasion of Ukraine. Since then the economic situation has become very uncertain. The German car industry forecasts a 4% drop in passenger car deliveries in Europe in 2022. But it goes ahead.

One half of the package that will be offered to investors will be entitled to (preferred) dividends and the other half, voting rights. Volkswagen has also approved the sale of 25% plus one of Porsche's common shares to the Porsche and Piëch families, who will thus be able to have a blocking minority when the sports company goes public. Among the investors interested in entering the capital of the legendary 911 manufacturer, there is the sovereign wealth fund of Qatar, the founder of Red Bull, Dietrich Mateschitz, or the president of LVMH, Bernard Arnault.

Porsche is now wholly owned by the Volkswagen group. In turn, this is controlled by a financial holding company in which the Porsche family and Piëch have the absolute majority of the votes. By placing Porsche on the stock market, Volkswagen will obtain resources to finance its investments in the energy transition. By 2030, Volkswagen aims for 80% of the Porsche range to be made up of electric vehicles.

The operation recalls the one made by the then Fiat Chrysler automobile group in 2016 with Ferrari (whose shares have since multiplied by five). Porsche is one of the most profitable companies in the automotive sector (with a margin of more than 15% on sales). In the first six months of 2021, revenues were 16,530 million (8.5% more) and operating profit was 2,790 million (24.6%).

“We have shown enormous resilience, especially in times of crisis,” VW and Porsche Chief Executive Officer Oliver Blume said yesterday. “Looking back with the coronavirus crisis, with the semiconductor crisis and this year with the Ukraine conflict, we have always been able to show very high profit margins,” he added. Anecdotally, more than a decade ago it was Porsche that tried to take control of the giant Volkswagen, but the attempt failed. Now it is Volkswagen that is giving up the jewel in its crown, to raise capital.