Porsche goes public: Why – and how to get Porsche shares

Porsche goes public: Why – and how to get Porsche shares

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Here’s what you need to know about the Porsche IPO

Written by Jan Ganger

At first the dates remained unclear, but now there is no possibility of a return: VW has canceled the signal to start the IPO of Porsche AG. ntv.de answers the most important questions.

What’s going on there?

Volkswagen takes Porsche AG public. As of now, it is fully owned by VW and is therefore a subsidiary of the group like Audi. Porsche’s driving business is integrated into it – i.e. series such as the 911, Cayenne, Macan, Panamera or Taycan.

But Porsche hasn’t been on the stock market for a long time?

It is not Porsche AG that is listed on the stock market, but Porsche SE (PSE). The company is controlled by the Porsche and Piëch families. It holds more than half of the voting rights in the Volkswagen Group. Only non-voting shares of Porsche SE are traded on the stock market. Joint voting shares are held by the two families.

Will the entire Porsche AG company go public?

No The capital of Porsche AG is divided into non-voting preference shares and ordinary voting shares. Volkswagen wants to keep a 75 percent stake in one of Porsche AG’s trunks. 25 percent plus one share goes to PSE. Up to a quarter of the preferred shares are traded on the stock market – this corresponds to 12.5 percent of Porsche’s total share capital.

your preferred stock?

As a rule, stock corporations in Germany issue ordinary shares. However, companies that are created by families in particular often issue preference shares. The main difference: holders of preferred shares do not have voting rights, but they receive a higher dividend. The founding family protects their influence on the company through common shares.

When will it be made public?

The first day of trading on the Frankfurt Stock Exchange is scheduled for September 29. Walking on the floor will be one of the biggest in Europe for a long time. Investors can join the stock from tomorrow, Tuesday.

How expensive are stocks?

Volkswagen is offering the preferred shares at EUR 76.50 to 82.50 each. This corresponds to a company value of 70 to 75 billion euros.

Short time. Not too high?

Porsche AG’s valuation is in the upper half of the range of 60 to 80 billion euros previously cited by investment bankers. For comparison: Porsche’s parent Volkswagen is currently worth a cool 87 billion euros. Porsche’s share of the 75 percent remaining in the Wolfsburg group after the successful IPO alone accounts for nearly two-thirds of this. That’s also the calculation of the IPO: Luxury car makers like Porsche or Ferrari are valued more on the stock market relative to their profits than big manufacturers like Volkswagen, also because they are largely unresponsive to the economy.

What is the real advantage of Porsche?

Along with Audi, Porsche is the cash cow of the Wolfsburg group. With an annual operating return of 15 percent, it is the most profitable of Volkswagen’s nine passenger car brands. Last year, Porsche generated sales of 33 billion euros and 302,000 vehicles were delivered and earned 5.3 billion euros from operations. The SUV models Cayenne and Macan and the most important sales market China are responsible for the strongest growth. Porsche management wants to increase earnings by seven to eight percent annually in the coming years. The medium-term return target is between 17 to 19 percent of sales. In the long run, the 20 percent mark should be cracked.

How do you get Porsche shares?

If you want to register for shares, you must contact your bank and order the paper. Preference is given to banks that are part of the consortium organizing the IPO. In Germany, these include: Baden-Württembergische Bank (BW), Comdirect, Commerzbank, Consorsbank, DAB BNP Paribas, Deutsche Bank, Deutsche Sparkassen/Finanzgruppe, Landesbank Baden-Württemberg (LBBW), Maxblue, S Broker and Unicredit. Whether you get stock depends on how big the demand is. It is quite possible that you will get nothing or less shares than you want. From Thursday next week, shares can be bought regularly on the stock market.

Why is VW taking Porsche AG public?

In general, the sale of the Porsche segment could push up to 19.5 billion to the coffers of VW. This will “give Volkswagen greater financial flexibility and thus help accelerate industrial and technological change,” the group said. Translated, this means: VW wants to use it to finance the electric transition.

What are the Porsche and Piëch families doing?

With the IPO, families get direct access to Porsche. The company was previously part of the Volkswagen group. With 25 percent plus one share, the family at Porsche will have fewer people standing in the way in the future – important decisions can only be made with their approval.

History has no conflicts, right?

You can say that. Under the later removed boss Wendelin Wiedeking, Porsche tried to take over the Volkswagen Group in the years 2005 to 2009. This led to a family row in the family of the owner Porsche and Piëch. Porsche joined VW and gradually acquired 74 percent of the group through purchases and options on VW shares. During the financial crisis, however, the Porsche umbrella company at the time ran out of money. VW turned the tables and saved the attacker from collapse with financial support. In return, the VW group previously received almost half of Porsche. The company has been fully owned by VW since 2012.

What does the IPO mean for other VW shareholders?

There will be a special allocation – the exact amount has yet to be determined. 49% of the total income, ie nine billion euros or more, will be distributed to shareholders. Mathematically, this results in a special dividend of around 18 euros per ordinary and preference share. It will be decided at an extraordinary general meeting in December. The dividend should be paid early next year.

How does the Porsche SE get stock?

Porsche SE intends to buy ordinary voting shares in Porsche AG in two steps. 17.5 percent with the IPO, another 7.5 percent if VW distributes a promised special dividend from the proceeds of the issue. The price of this is based on the issue price for profit – and a 7.5 percent premium. For this, Porsche Holding is ready to borrow up to 7.9 billion euros.

Will the IPO be successful?

That cannot be predicted. Volkswagen already has a strong commitment to almost 40 percent of the shares offered: In addition to the Emirate of Qatar, which also has a stake in Volkswagen, Norway’s sovereign wealth fund (Norges Bank) and investors T. Rowe Price and ADQ want to subscribe to the shares of Porsche. Enlighten shareholders like you to facilitate the IPO. Qatar’s state-owned company QIA alone intends to spend up to 1.9 billion euros on this. Qatar will buy around 5 percent of Porsche AG’s preferred share capital, making it one of the largest shareholders in Porsche.

(This article was first published on Monday, September 19, 2022.)