German car making giant, Volkswagen (VW), has disclosed that it is aiming for a valuation of up to €75bn (US $75 billion; £65.8bn) for Porsche when the luxury brand is floated on the stock market.
The company published the prospectus today, Monday, September 19, 2022 after which investors can subscribe to Porsche shares. Meanwhile, trading in the shares is due to start in Frankfurt on 29th September.
VW’s Chief Financial Officer Arno Antlitz indicated the company’s readiness to enter the market with its ambitious target. “We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors.”
The share sale is set to be Germany’s second-largest ever initial public offering (IPO).
VW indicated in a statement to investors that it will price preferred shares in the flotation of Porsche at €76.50 to €82.50 per share, which would give the sportscar maker a stock market valuation of €70 billion to €75 billion.
At the upper end of the range, the shares when floated would be Europe’s third-largest IPO on record. However, the figures announced on Monday fell short of an earlier valuation target, as much as €85bn– amid investor concerns over rising interest rates and a potential global recession.
VW’s statement further added that the company will raise as much as €9.4 billion from the share sale, which will help pay for its shift to electric vehicles and spending on software development.
If the IPO goes ahead, VW said it will hold a meeting for investors in December when it plans to propose distributing a special dividend of 49% of the total gross proceeds from the share sale to shareholders.
The deal comes even as relatively few companies have listed shares in Europe this year as the region faces an energy crisis, high inflation and rate hikes.
The IPO Plan
Under the IPO plan, the Porsche-Piech family which lost control of the iconic brand to VW over a decadepowe, will pay a premium to purchase shares that will hand back to it significant decision-making power.
Porsche AG aims to win over investors with its track record of success and high margins, even as shares of other luxury carmakers like Ferrari (RACE.MI) and Aston Martin (ASTON.UL) have suffered this year in the tumult on European stock markets.
However, the structure of the listing, in which Volkswagen’s largest shareholder – Porsche SE (PSHG_p.DE) – will receive a blocking minority of 25% plus one of the voting ordinary shares, sparked criticism from some fund managers, according to sources.
The IPO will list 25% of preferred shares, which do not have voting rights, meaning stock market investors will own just 12.5% of Porsche AG’s capital and have little say.
Porsche SE, the holding company of Germany’s Porsche and Piech families, will pay a 7.5% premium for the shares it receives in the listing.
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