Porsche makes Europe’s largest stock market listing in over 10 years

(BFM Bourse) – Despite the turmoil in the financial markets, Volkswagen has successfully launched its luxury brand Porsche on the stock market. This is the largest stock exchange operation in Europe for more than ten years.

German luxury carmaker Porsche got off to a flying start on the Frankfurt Stock Exchange on Thursday, with an initial listing above the target for one of the largest stock exchange operations in Frankfurt despite a gloomy context.

The action took off to 84 euros, above the IPO set at 82.50 euros, during its first IPO at 07:15 GMT, valuing the Porsche group at more than 76 billion euros.

“A great dream is coming true for Porsche,” commented Oliver Blume, head of Porsche and Volkswagen, the parent company of the sports car group, in a press release. “Porsche, one of the most successful sports car manufacturers in the world, is entering a new era of increased entrepreneurial flexibility,” added the CEO.

The largest IPO in Europe since 2011

The issue volume makes it the second largest IPO in Germany after Deutsche Telekom in 1996 and the largest in Europe since 2011 with Swiss commodities giant Glencore.

If Volkswagen has placed only 12.5% ​​of the capital in its gold nugget on the stock market, the second-largest car group in the world intends to withdraw billions of cash from it to inject its expensive transition to the electric and autonomous car.

Porsche has a higher starting line capitalization than other German giants such as BMW (47 billion euros) and Mercedes-Benz (58 billion euros), which sell far more cars than the Zuffenhausen company, near Stuttgart (south).

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. The Dax index on the Frankfurt stock exchange has lost almost a quarter of its value since the start of the year, with the car sector, which is struggling with sales, particularly neglected.

“It is not the best time for an IPO,” said German car expert Ferdinand Dudenhoeffer, who nevertheless sees this operation as a test of “the international value given to German engineering”.

Luxury view

Volkswagen has secured support from key shareholders in Porsche, 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.

The company’s outlook has a lot to do with it: Porsche has raised its operating margin target to a range between 17 and 18%, and revenue should grow by 11 to 14% over 2021. Porsche is developing in a luxury car sector that should “grow 13% per year in the long term”, according to analysts at Berenberg.

The multiple winner of the 24 Hours of Le Mans brand is converting its range to electric, with the sporty Taycan born in 2019 and of which almost 20,000 copies have been sold from January to June, a new electric SUV Macan expected in 2024 and the launch of another SUV from the middle of the decade.

A windfall of around 19 billion euros for Volkswagen

Porsche is currently 100% owned by the Volkswagen Group, which itself is controlled by the Porsche SE holding company, a treasure of the Porsche and Piëch families, who will strengthen their base through this IPO. In addition to the so-called preference shares – without voting rights – that the investors have grabbed, Volkswagen is selling 25% of the capital plus one share to Porsche SE, which will get a blocking minority in the sports car manufacturer.

Volkswagen will collect a total windfall of around 19 billion euros, half of which will be used for investments in electricity with six battery cell factories planned in Europe and software for electric and autonomous vehicles.

The Wolfsburg group, whose title has lost 23% since January, also hopes the partial sale of Porsche will boost its own stock market value by around 84 billion euros, a fraction of what its US rival Tesla weighs. , worth about $900 billion.

(With AFP)

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