Porsche shares come at the end of September: VW subsidiary Porsche before going public with a valuation in the billions – VW shares slightly higher

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From then on, the Volkswagen subsidiary from Stuttgart will in all likelihood allow some of its preferred shares to be 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. The market capitalization of the sports car manufacturer is targeted at between EUR 70 billion and EUR 75 billion. That’s less than was expected prior to the recent stock market turmoil, but in line with what analysts had recently been forecasting.

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 or 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.

However, the inspectors have already set the price range: the Porsche AG preference will be offered in a corridor between 76.50 and 82.50 euros per item. The plan is to issue almost 114 million shares. This includes almost 15 million papers for a possible over-allotment, as the parent company VW further announced. If everything goes as planned and the actual asking price levels off in the range mentioned, gross proceeds of EUR 8.7 to 9.4 billion are expected.

“The planned IPO of Porsche AG should have a positive effect on the valuation of Volkswagen AG,” wrote DZ Bank expert Michael Punzet in a study on Monday morning. “However, it remains to be seen to what extent the future market value of Porsche AG will be taken into account in the valuation of VW shares.” His vote for the VW preference share is “buy” with a fair value of 165 euros. He is also optimistic about the Porsche SE shares and rates them as “buy”.

Porsche SE should benefit from the planned IPO of the sports car manufacturer of the same name, on the one hand from a possible higher valuation of VW shares and, on the other hand, from higher dividend income. However, we assume that the future dividend income from the investment in Porsche AG will primarily be used to repay debt and will therefore not have a positive effect on future dividend payments by Porsche SE.”

The subscription period is scheduled to begin this Tuesday (September 20th). 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 some of the Porsche benefits.

VW Group CFO Arno Antlitz sees a decisive step taken: “We are now on the home straight with the Porsche stock market plans.” Public trading in shares in the sports car manufacturer, which has been brought up again and again for years, had been examined since February. The fundamental decision was made two weeks ago.

Europe’s largest car group wants to tap additional sources of money. VW AG plans to use the proceeds to invest billions more in electromobility and digital. She also hopes to become more attractive to investors. 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 soon.

At the same time, the PSE gets 25 percent plus one share in the tribes, so it has an influence on important decisions through 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 on the benefits.

Several analysts recently estimated Porsche’s valuation at up to 85 billion euros. Other forecasts went from 80 to 100 billion euros – these calculations are mostly from the times before the recent price corrections on the stock markets. With the now targeted issuance range, the valuation of Porsche AG is between 70 and 75 billion euros, or up to 78 billion euros including the premium for ordinary shares, and is therefore in line with the latest expectations. VW currently has a little more than 88 billion euros.

In total, the restructuring should result in 911 million individual securities – a kind of advertising gimmick 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 just under 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 returns 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.

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,” said 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. The move also shows that Porsche and VW are investing in industry change and the future of jobs.

At least indirectly, however, the interests of the major VW owners also 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. In addition, dangers for the auto industry remain – new supply chain problems, the progress of the Ukraine war, inflation in energy prices and the end of the low interest rate phase are just a few.

Jefferies leaves Porsche on “Hold” – target 80 euros

In view of Porsche AG’s IPO, the Jefferies analysts have left the rating for Porsche SE on “Hold” with a price target of EUR 80. According to his calculations, the price range for preferred shares between 76.50 and 82.50 euros would total around 72 to 78 billion euros, analyst Philippe Houchois wrote in a study published on Monday. Porsche SE, which is acquiring ordinary shares in Porsche AG, has not yet made any statements about the sources of financing. After a special VW dividend, he estimates the net debt of the VW Group holding company at 5.5 to 6.0 billion euros. A dividend from Porsche AG should cover the financing costs incurred.

VW shares and Porsche SE shares firmer – billion IPO becomes concrete

At the start of the week, there was relief on the stock exchange that Porsche SE and Volkswagen AG want to go through with the IPO despite the current situation on the financial markets. The VW preferred shares listed in the DAX increased by 0.5 percent to 146.26 euros and were thus one of the few winners among the standard values ​​in Germany in a weak market environment. The shares of Porsche SE, which are also listed in the leading German index, went up by two and a half percent.

WOLFSBURG / SUTTGART / NEW YORK / FRANKFURT (dpa-AFX)

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