Porsche is already whetting investors’ appetites

While the introduction of Porsche on the Frankfurt stock exchange is scheduled for Thursday, September 29, 2022, many investors have already positioned themselves. The Volkswagen Group must recover 19 billion euros, half of which must be invested in electrification.

The valuation of Porsche should be close to 75 billion euros.

Amidst the darkness of the financial markets, the Volkswagen Group is thinking big and launching Porsche on the Frankfurt Stock Exchange on Thursday, September 29, 2022. To seduce investors, the manufacturer of the 911 is betting on its unabashed financial health, like the entire automotive sector. “luxury car, and on an almost century-old history that has made it a benchmark for sports cars”made in Germany“.

Some potential customers may not yet be able to afford a Porsche, but they can buy shares“, recently remarked the CFO Lutz Meschke, with confidence in the power of the brand. In terms of issue volume, it will be the second IPO in Germany after Deutsche Telekom’s in 1996 and the biggest in Europe since 2011 with Swiss commodities giant Glencore.

If Volkswagen does not place more than 12.5% ​​of the capital in its bullion on the stock market, the second-largest car group in the world intends to raise billions in cash to inject its costly transition to the electric and autonomous car. Volkswagen is offering a total of 114 million shares in “Porsche AG”, at a unit price between 76.50 and 82.50 euros. That’s an issue volume of between 8.7 and 9.4 billion euros and a stratospheric valuation of around 75 billion euros.

This capitalization would exceed the value of other German giants such as BMW (49 billion euros) and Mercedes-Benz (61 billion euros), which sell many more cars than the company Zuffenhausen near Stuttgart.

The operation is all the more unusual as IPOs have been rare in Europe in recent months in an environment characterized by inflation, rising interest rates and the war in Ukraine. But Porsche’s arrival on the stock market is whetting appetite: securities traded last week at nearly 94 euros on the gray market, according to Bloomberg.

Volkswagen has already confirmed that it has attracted reference shareholders such as the public investment funds of Qatar and Abu Dhabi, the Norwegian sovereign wealth fund and the US asset manager T. Rowe Price. Together, they will hold nearly €3.6 billion in preferred shares, with Qatar accounting for the largest share.

also read : Porsche aims for more than 20% operating margin

The booming outlook for the company has a lot to do with it: the number of units sold crossed the symbolic threshold of 300,000 units last year. For this year, Porsche has raised its operating margin target, which should now reach between 17 and 18%. Revenue is expected to grow by 11 to 14% compared to 2021.

Except in a sluggish car market, the luxury car sector performs best, it “will grow 13% per year over the long term, more than three times faster than the mass market segment“, according to Berenberg analysts.

The racecar maker is gradually converting to electric, as evidenced by the Taycan, of which it sold nearly 20,000 units from January to June, and the new 100% electric Macan expected in 2024.

Porsche is currently 100% owned by the Volkswagen Group, which itself is controlled by the Porsche SE holding company, the family treasure. Porsche and Piech which will strengthen their base through this IPO. In addition to the so-called preference shares – without voting rights – that investors will snap up, Volkswagen will sell 25% of the capital to Porsche SE, which will get a blocking minority in the sports car manufacturer.

also read : Porsche’s IPO will “accelerate” Volkswagen’s electric shift

Volkswagen will collect a total windfall of around 19 billion euros, half of which will be used for investments in electricity, the group plans to build six battery cell factories in Europe and to strengthen Cariad, the subsidiary that develops the software for electric and autonomous cars.

Volkswagen also hopes that the partial sale of Porsche will inflate its stock market value, which is about 90 billion euros, a fraction of the market value of Tesla, which is valued at about $950 billion. (with AFP)

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