Volkswagen AG has decided to push ahead with its plan to list a minority stake in sports car maker Porsche this year despite the markets gyrating, paving the way for what could be one of the biggest deals Europe’s initial public.
The carmaker plans an IPO in late September or early October, subject to developments in capital markets, VW said in a statement Monday after a meeting of its supervisory board. Europe’s biggest automaker aims to finalize the listing by the end of the year.
“This is a historic moment for Porsche,” said Oliver Blume, CEO of VW and Porsche. “We believe an IPO would open a new chapter of greater independence for us as one of the most successful sports car manufacturers in the world.”
With the share sale, the billionaire Porsche and Piech clan are set to regain direct influence over what was once their family business, some 13 years after they were forced to sell the sports car business to Volkswagen. More than a decade ago, Porsche Automobil Holding SE attempted to take control of the much larger Volkswagen, but the bold move fell through when funding dried up during the financial crisis.
As part of the IPO, VW and Porsche plan to end a so-called dominance agreement that transfers profits and losses to the parent company by the end of the year, to be replaced by a cooperation agreement.
As more of a hold on Porsche is on the cards for the family, VW hopes to generate funds that will help bolster its ambitious investment plans in electric models and groundbreaking new digital features. The plan faces some of the toughest market conditions in years when a slowing economy, runaway inflation and soaring energy costs have largely crippled public listings.
Investors will be able to buy non-voting Porsche preferred shares, while the family, which owns a 53% stake in Volkswagen through its investment company Porsche Automobil Holding, is expected to buy a 25% blocking minority stake plus a stock. The remaining voting shares will remain with Volkswagen.
Even as markets turn, Porsche has aligned investor interest in its IPO at a valuation of up to 85 billion euros ($84 billion), people familiar with the matter told Bloomberg News last month. . The maker of the 911 sports car and electric Taycan has secured pre-orders that exceed the proposed shares at a valuation between 60 billion and 85 billion euros, said the people, who asked not to be identified because discussions are private.
High-profile investors including T Rowe Price Group Inc. have already expressed interest in subscribing to the IPO in this valuation range, the sources said. On Monday, VW said Qatar Investment Authority plans to buy a 4.99% stake subject to a fundamental investment agreement. Porsche has also attracted interest from billionaires, including the founder of energy drink maker Red Bull, Dietrich Mateschitz, as well as LVMH chairman Bernard Arnault, the sources say.
VW plans to offer the preferred shares of Porsche also to retail investors in countries including Germany, Austria, Switzerland, France, Spain and Italy, the company announced on Monday, confirming a previous report from Bloomberg News.
Many European and US institutional asset managers who typically invest in large German IPOs have so far been reluctant to make firm commitments due to corporate governance issues, the sources said. Still, Porsche has enough demand to nearly fill the so-called shadow order book at the high end and is oversubscribed at the low end, the people said.
The family’s heritage dates back to Wolfgang Porsche’s grandfather, Ferdinand Porsche, who created the VW People Car which later became the Beetle. Ferdinand Porsche’s son, Ferry Porsche, established the sports car operations. The first vehicle to bear the Porsche name was registered in 1948, it was the 356 “No.1” Roadster.
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