Porsche Crossing Fingers for $85B Valuation Ahead of September IPO Launch

Despite increasing inflation and the crisis in Ukraine, Volkswagen (VW) said it will list its legendary sports car manufacturer Porsche in one of the most extensive public offerings in years, according to the Wall Street Journal.

According to analyst expectations, the offering could benefit Porsche anywhere from 60 billion euros to €85 billion, or between $59.8 & $84.6 billion. This would bring in much-needed capital for VW, which the company’s executives say will aid in funding its transition to battery-powered vehicles and autonomous driving.

VW and Porsche CEO Oliver Blume told reporters in a teleconference on Tuesday, “We have demonstrated a remarkable resilience, particularly in crises.” Looking back on the “corona crisis,” “semiconductor crisis,” and “this year and the Ukraine war,” we have always been able to demonstrate excellent profit margins, and we believe this will be compelling.

It has been 13 years since Porsche and the Piech family were required to sell the sports car industry to Volkswagen, but thanks to the share sale, they’ll have more influence at their old firm. Porsche Automobil Holding SE, a family business, attempted to take over the much larger Volkswagen a decade ago.

Still, the move was derailed when funding started to dry up during the financial crisis. Like Volkswagen, the listed Porsche will operate under a dual share structure consisting of voting or non-voting shares. Worries about Porsche’s management have been raised due to the company’s anticipated minimal free float and insufficient management independence (Blume will continue to lead both Porsche and VW).

VW offers non-voting preferred shares to IPO investors for 12.5% of the company. VW would get about 10.6 billion dollars in profits if Porsche were valued at its desired range of 85 billion dollars ($84 billion). The family business, Porsche SE, which controls 53% of VW’s voting rights, is also purchasing common shares from the company. In addition, Volkswagen will provide a special dividend to assist Porsche SE in financing the purchase of a blocking holding of 25% plus one stake in the publicly traded luxury automaker.

Preferred shares of Volkswagen gained as much as 3.9% in the Frankfurt trade. On Tuesday, the firm formally announced its ambition to list here on Frankfurt Stock Exchange. Volkswagen expects the IPO to generate capital to support its extensive investment ambitions.

Porsche’s valuation at 85 billion euros would be more than twice as high as Ferrari NV’s market capitalization, even though Ferrari only produces a small fraction of Porsche’s annual output of over 300,000. Under the terms of IPO, Volkswagen would be the most significant stockholder in Porsche, and shareholders would be able to invest in shares.

However, these shares would not carry legal voting rights. While some are wary of IPOs because of market uncertainty caused by the turmoil in Ukraine and excessive inflation, other opportunity buyers have questioned Porsche’s opulent credentials.

Porsche would be hoping its IPO performs better than the Polestar IPO earlier this year. The company performed well on its first trading day, but its stock price fell significantly during the following week.