Porsche AG is scheduled to go public on September 29th. From then on, the Volkswagen subsidiary from Stuttgart will most likely have some of its preferred shares traded freely on the financial market.
This was decided by the board of directors and the supervisory board of the VW Group after meetings on Sunday evening. A market capitalization of between 70 and 75 billion euros is now being targeted for Porsche. That’s less than was expected prior to the recent stock market turmoil, but in line with what analysts had recently been forecasting.
Relief for investors
The fact that the IPO is now to be carried out despite the tense situation on the financial markets initially relieved investors on Monday. The shares of the group holding company Porsche SE rose significantly, the VW preference shares increased slightly.
The Porsche papers are now to be offered in a corridor between 76.50 and 82.50 euros per piece. A total of almost 114 million shares will be issued. This includes almost 15 million papers for a possible over-allotment, as the parent company VW announced. Gross proceeds for Volkswagen are expected to be between 8.71 and 9.39 billion euros. VW AG plans to use the proceeds to invest billions more in electromobility and digital.
For the start of the stock exchange in Frankfurt, the Wolfsburg-based company and the umbrella company Porsche SE (PSE) had previously generally aimed for the end of September to the beginning of October. A specific day was initially not mentioned – the decision to go onto the floor was still subject to change due to the tense global economic situation. The fundamental decision was then made two weeks ago.
Subscription period begins on September 2nd.
This Tuesday (September 20th), the subscription period for the Porsche preference will begin. It goes up to one day before the IPO, provided that the financial regulator Bafin approves the securities prospectus. Private investors in Germany, Austria, Switzerland, France, Italy and Spain should also be able to purchase part of it.
Half of the share capital of Porsche AG has already been split into non-voting preferred shares and half with voting ordinary shares. Up to a quarter of the assets – about an eighth of all shares – are to go on sale.
At the same time, the PSE gets 25 percent plus one share in the tribes, so it has an influence on important decisions via a blocking minority. This step has now also been firmly agreed: the PSE Supervisory Board approved a corresponding purchase agreement. Depending on the form of the final conditions on the day of the IPO, VW and Porsche-Holding calculate gross proceeds of 9.36 to 10.10 billion euros for the common stock business. Included here is a surcharge of 7.5 percent to the benefits.
911 million individual securities
Overall, the restructuring is said to result in 911 million individual securities – a kind of advertising stunt with which Porsche alludes to its probably best-known model, the 911. The operational business with other series such as the Cayenne, Macan, Panamera or Taycan is bundled in the AG. In contrast, PSE, controlled by the Porsche and Piëch families, holds the majority of the voting rights in Wolfsburg.
Most of the preferred shares are likely to go to large institutional investors rather than small ones. According to VW, Qatar wants to stock up on almost 5 percent. The Gulf Emirate is already the third most important shareholder in the entire group. Another anchor investor in the Porsche IPO is the Norwegian sovereign wealth fund, in which the central bank in Oslo manages the income from the country’s oil and gas reserves and wants to increase them for future generations. In addition, the US fund company T. Rowe Price and the state investment company ADQ from Abu Dhabi are investing in the Stuttgart-based company.
The Swabians are a pearl of return in the Wolfsburg multi-brand group. Since the beginning of September, after the departure of Herbert Diess, Porsche boss Oliver Blume has also headed the VW Group board. The company rejected criticism of the dual function with reference to its transparency and voting rules. These should be sufficient to avoid conflicts of interest. The same applies to VW supervisory board chairman Hans Dieter Pötsch, who also heads PSE.
Extraordinary General Meeting
In the event of a successful IPO, there will be an unscheduled Volkswagen general meeting in December. It is proposed to pay out a “special dividend in the amount of 49 percent of the total gross proceeds from the placement of preferred shares and the sale of common shares at the beginning of 2023,” explained VW. The workforce should also benefit. The VW works council emphasized the agreed bonus of 2,000 euros for each employee in the company wage agreement and in Saxony.
At least indirectly, the interests of the major VW owners play a role in one of the largest IPOs in Germany. The Porsche/Piëch clan is said to want to regain more direct access to the sports car manufacturer with its name. In 2008/2009, Volkswagen was able to fend off a takeover attack by the then Porsche management. In the end, the Lower Saxony turned the tables and swallowed up the profitable subsidiary. In return, both families received a majority stake in the car giant.
It now seems increasingly unlikely that the listing could be called off in the short term. According to reports, however, there is a minimum evaluation threshold that VW definitely wants to achieve.
