On Monday, the Volkswagen Group proudly disclosed its intention to float the Porsche sports car brand, which could be one of the world’s biggest listings despite the current state of European stocks deteriorated by inflation and the Russia-Europe energy standoff, according to Inquirer.Net.
In retrospect, VW declared in late September or early October its “intention to float” for an initial public offering (IPO) expected to be completed by the year’s end. Nonetheless, it also stated that the timing and listing were “subject to further capital market developments.”
Earlier on Monday, Reuters was informed by trusted sources that Volkswagen might prolong the four-week window for buyers to express interest. However, the plan could be abandoned entirely if investors do not show sufficient interest to make the move profitable.
“It would be the technical go-ahead, nothing more,” one of the sources asserted prior to the decision. “It’s paving the way, but this would not guarantee that the stock market bell will ring in the end.”
An estimated valuation of between $60 billion and $85 billion is anticipated by investors. Despite the success of the Porsche brand, other high-end automakers like Aston Martin and Ferrari have seen their stocks decline.
Interestingly, the initial public offering may rank among the biggest in German history and the biggest in Europe since 1999, as per the highest projections revealed by Refinitiv data.
In order to commit to a 4.99% interest in the newly listed firm, Qatar will be a cornerstone investor.
Meanwhile, in an effort to capitalize on Porsche’s ardent followers, preferred shares will also be made available to retail investors in nations around Europe, including France, Spain, and Italy.
Additionally, Volkswagen approved the sale of 25% plus one share of ordinary shares in Porsche AG to Porsche SE, giving the dominant Porsche and Piech families a blocking minority.
In order to expand its software and electric vehicle offerings, Volkswagen argued that going public would be a crucial step in the company’s development.
It is worth noting that Porsche, as a luxury brand, has been bringing in money for the Volkswagen Group. During the first half of this year, its operating profit increased by 22%, while the mass market Volkswagen brand saw an 8% decline.
It is a risky time for a stock market launch as per some investors, given that European shares are in free fall, inflation is at all-time highs, and Russia has cut off the gas supply. According to Hendrik Schmidt, a governance expert at Volkswagen investor DWS, the Porsche and Piech families’ desire for greater power is the sole motivation behind their insistence on the listing, even in the face of such market uncertainty.
On the other hand, the head of sustainability and corporate governance at top-20 Volkswagen investor Deka Investment Ingo Speich, refused to remark on Deka’s plan regarding Porsche shares purchase.
“Market conditions are currently very unfavorable,” Ingo Speich state.
In December, Volkswagen will host an extraordinary general meeting to suggest a special dividend to shareholders of 49% of the net proceeds to be distributed in early 2023 if the initial public offering (IPO) proves successful.
“VW should work on its timing: the plan to IPO was announced the very same day Russia invaded Ukraine, the ‘Intention to Float’ comes out exactly when Russia stops supplying gas to Germany.” Analysts at Stifel stated.
Given that the anticipated post-pandemic recovery has yet to materialize, Germany’s automobile association anticipates a 4-percent decline in passenger car deliveries in Europe this year.
