Why Porsche goes public despite a complicated economic context?

It is now official: between the end of September and the beginning of October 2022, Porsche shares will be listed, barring unforeseen circumstances, on the Frankfurt Stock Exchange, despite the volatility of the stock markets at the moment. Admittedly, the timing is a little surprising; it would probably have been better to wait for a more favorable period but, as in the markets, everything remains relative.

And, in relative terms, the timing could not have been better as the Porsche and Piëch families, the trade unions and the Land of Lower Saxony (which holds 20% of the Volkswagen Group’s voting rights) have reached an agreement . A perfect astral conjuncture and an opportunity that cannot be wasted, even if the markets do not help.

Everything in the family

Porsche is currently 100% owned by the Volkswagen Group, which is itself controlled by the holding company Porsche Se, the strongbox of the Porsche and Piech families, which holds the absolute majority of the voting rights (around 54%). With the IPO, the families, through the holding company, will acquire 25% plus one share of Porsche, with a premium of 7.5%, while retaining an absolute majority of the voting rights.

Ingo Speich, head of sustainability and corporate governance at Deka Investment, explains that Porsche’s listing structure « primarily serves to ensure that the family remains the main shareholder ». The family wants to continue to hold the reins.

Oliver Blume, Porsche CEO

Oliver Blume, the new CEO of the Volkswagen Group

A family that recently contributed to the « departure » of Herbert Diess, CEO since 2018 who played a crucial role in getting the group out of the dieselgate scandal. After his departure, Oliver Blume, former CEO of Porsche, was called in to lead the company. A dual role behind which some investors could see a potential conflict of interest, particularly with a view to listing.

According to a survey conducted by Bernestein Research at the end of July, 71 respondents believed that Oliver Blume’s dual role had a negative impact on Porsche’s IPO. Judging from the financial results of Porsche, whose operating profit rose 22% in the first half of the year, and from the sales of its iconic models, it does not appear that consumers are negatively affected by the recent management change. . Who knows if investors will have a different feeling.

Other investors on the horizon

So far the feedback has been very positive. It seems that the interest of other investors has already been measured and that the Qatar Investment Authority (the sovereign wealth fund of the Gulf country, which already holds a stake in the company) has declared its intention to acquire 4.99% of the preferred shares of Porsche, becoming a key investor.

Also interested are a number of billionaires such as Dietrich Mateschitz (founder of Red Bull) and Bernard Arnault, chairman of LVMH (Louis Vuitton Moet Hennessy), the fourth richest man in the world with an estimated fortune of around $132 billion.

And it is precisely Bernard Arnault who gives the signal for a new reflection: after the IPO, will Porsche aim to qualify as a luxury brand (like LVMH or Richemont), as Ferrari successfully did, or will it remain in the automotive sector, the ultimate expression of sportiness and Made in Germany technology? The decision to list, for the moment, only in Frankfurt, suggests the second solution.

A historic operation

Meanwhile, the estimated value of the listing is between 60 and 85 billion euros and, in the latter case, it would be the largest IPO ever in Germany and the largest in Europe since 1999, when Enel was listed at over $17 billion. Some important elements have not yet been disclosed, such as the price of the placement, but it is a fairly complex operation that will bring several billion into the coffers of the Volkswagen group.

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This money is necessary for the transition to electric and autonomous driving, which will then make it possible to finance the enormous investments required. Employees will also receive a bonus of 2000 euros. Oliver Blume, meanwhile, said: « We believe the listing opens a new chapter, with more independence, for one of the most successful sports car manufacturers in the world. » and, he added, « we will have the opportunity to continue to successfully develop our strategy ». A strategy that plans to sell eight out of ten electric cars by 2030.

But the future of Porsche also goes through motorsport. If the brand entered Formula 1, it would be in competition with Ferrari, which, as we have already mentioned, could also be an opponent on the stock market. Nevertheless, Porsche’s arrival in F1 in 2026 has cooled in recent days. Indeed, as revealed by our colleagues from Motorsport.comPorsche, which could have powered Red Bull in 2026 with the new regulations, seems to have moved away from the Austrian company.

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