Porsche valued at 75 billion euros for its IPO

Inside the Porsche factory in Stuttgart, Germany on September 26, 2022 (THOMAS KIENZLE/AFP)

German luxury car maker Porsche makes its IPO on Thursday at a quote that values ​​it at 75 billion euros, signing one of the biggest stock exchanges in Frankfurt despite a somber context.

The action was placed by parent company, 12-brand giant Volkswagen, at an introductory price of 82.50 euros, the company said late Wednesday in a press release.

This price is at the top of the previously announced range of between 76.50 and 82.50 euros per share.

The first title quote is scheduled for Thursday around 07:15 GMT.

Strong demand for the shares “shows investors’ confidence in Porsche’s future,” Volkswagen’s chief financial officer Arno Antlitz said in a statement.

To seduce the stock market, the manufacturer of the legendary 911 has bet on its insolent financial health like the entire luxury car sector and on an almost century-old history that has made it a reference in sports cars “made in Germany”.

At Porsche Headquarters in Stuttgart, Germany on September 26, 2022
At Porsche’s headquarters in Stuttgart, Germany, on September 26, 2022 ( THOMAS KIENZLE / AFP/Archives )

The issuance volume of €9.4 billion makes it the second largest IPO in Germany after Deutsche Telekom in 1996 and the largest in Europe since 2011 with Swiss raw materials giant Glencore.

If Volkswagen ended up putting just 12.5% ​​of its nugget’s capital on the stock market, the world’s second-largest auto group is aiming to get billions of cash to inject into its costly transition to electric and self-driving cars.

– Luxury carrier –

Porsche has a higher capitalization at the starting line than other German giants such as BMW (47 billion euros) and Mercedes-Benz (58 billion euros), which sell much more cars than the company Zuffenhausen, almost from Stuttgart ( south).

The operation is all the more exceptional because, in recent months, IPOs have been rare in Europe in an environment marked by inflation, rising interest rates and the war in Ukraine.

Assembly of an electric Porsche Taycan at the group's factory in Stuttgart, 26 September 2022
Assembly of an electric Porsche Taycan at the group’s factory in Stuttgart, 26 September 2022 (THOMAS KIENZLE/AFP)

The Dax index on the Frankfurt Stock Exchange has lost almost a quarter of its value since the beginning of the year, with the automotive sector suffering from sales difficulties and being particularly neglected.

“It’s not the best time for an IPO,” said German automotive specialist Ferdinand Dudenhoeffer, who nevertheless sees it as a test of the “international value given to German engineering”.

Volkswagen has secured the support of Porsche’s main shareholders, such as Qatari and Abu Dhabi public investment funds, the Norwegian sovereign wealth fund and US asset manager T. Rowe Price.

Together, they will hold around €3.6 billion in preferred shares, with Qatar representing the largest stake.

The company’s outlook has a lot to do with this: Porsche has raised its operating margin target to between 17 and 18% and revenue is expected to grow by 11 to 14% compared to 2021.

Porche operates within a luxury car sector that is expected to “grow 13% a year over the long term,” according to analysts at Berenberg.

The multiple winner of the 24 Hours of Le Mans is converting its range to electric, with the sporty “Taycan” born in 2019 and of which around 20,000 copies were sold from January to June, a new electric SUV “Macan” expected in 2024 and the launch of yet another mid-decade SUV.

– Influence of the Porsche and Piëch clan –

Currently, Porsche is 100% owned by the Volkswagen group itself, controlled by the Porsche SE holding, a treasure of the Porsche and Piëch families that will strengthen their base with this IPO.

Inside the Porsche factory in Stuttgart, 26 September 2022
At the Porsche assembly plant in Stuttgart, 26 September 2022 (THOMAS KIENZLE / AFP)

In addition to the so-called non-voting preferred shares that investors snapped up, Volkswagen will sell 25% of the capital plus one share to Porsche SE, which will have a blocking minority in the sports car maker.

Volkswagen will receive a total windfall profit of around €19 billion, half of which will be used for investments in electricity with six planned battery cell factories in Europe and software for electric and autonomous vehicles.

The Wolfsburg group, whose title has lost 23% since January, also expects the partial sale of Porsche to inflate its market value by around 84 billion euros, a fraction of the weight of its US rival Tesla, valued at around $900. billion.

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