Volkswagen likely to raise up to $9.4bn in Porsche IPO

German car maker seeks valuation of €70bn to €75bn in what could be Europe’s largest listing in more than a decade

An employee works on a Porsche 911 at a dealership in Dortmund, Germany. Bloomberg
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Volkswagen seeks to raise as much as €9.4 billion ($9.41bn) from the initial public offering of sports-car maker Porsche in what could be Europe’s largest listing in more than a decade.

The German car maker said on late Sunday it was seeking a valuation of €70bn to €75bn for the listing, below an earlier top-end goal of as much as €85bn, with the deal going ahead at a time of deep market upheaval.

European markets have been largely shut to IPOs for most of the year, with companies shying away from seeking new listings because of the region’s energy crisis, rising interest rates and record inflation.

Porsche isn’t alone in scaling back valuation targets, with Intel lowering expectations for its Mobileye IPO.

Amid the stock market slump, the plan to list is getting a boost from firm commitments of key cornerstone investors.

“We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors,” VW’s chief financial officer Arno Antlitz said. The offer period will start on September 20 with a planned trading start on September 29.

During meetings with potential investors, VW pitched the listing as a chance to invest in a company that combines the best of car-making rivals like Ferrari and luxury brands such as Louis Vuitton. While Ferrari and Porsche both target wealthy buyers, the Italian manufacturer remains in a league of its own, boasting industry-leading margins and delivering a fraction of Porsche’s 300,000 annual sales.

At the mid-valuation point for the preference shares, the IPO would value Porsche at 10.2 times earnings before interest, tax, depreciation and amortisation, according to Jefferies. This compares to Ferrari’s Ebitda multiple of 23.1 times. Still, Porsche’s upper valuation range almost matches VW’s total market value — comprising Audi, Skoda, the VW brand as well as Seat — of €88bn.

Aside from offering investors a slice of one of the most recognisable names in car-making, the IPO will hand back significant decision-making power to the Porsche-Piech family, who lost control of the sports-car maker more than a decade ago after a protracted takeover battle with VW.

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To account for the interests of the billionaire family, who hold 53 per cent of VW’s voting shares through the separately listed Porsche Automobil Holding, the Porsche IPO is complex and has triggered governance concerns that mirror those about VW’s convoluted structure.

Investors will be able to subscribe to 25 per cent of Porsche preferred shares, which carry no voting rights. The family will buy 25 per cent plus one of Porsche’s common shares with voting rights, meaning they will receive a minority blocking stake and sway on future key decisions.

The family has agreed to pay a 7.5 per cent premium on top of the price range for the preferred shares and plans to fund the acquisition with a mix of debt capital of as much as €7.9bn and a special dividend paid out by VW.

Proceeds from the deal will help VW with financing its electric-vehicle transition and investments in software, the car maker said.

Updated: September 19, 2022, 10:19 AM
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