Porsche shares rise despite weaker markets after landmark $72-bn listing

Porsche AG shares made a strong start on Thursday after Volkswagen defied volatile markets to list the sports car brand at a valuation of 75 billion euros ($72 billion) in Germany's second-biggest market debut ever.
 

Volkswagen priced Porsche AG shares at the top end of the indicated range and raised 19.5 billion euros from the flotation to fund the group's electrification drive. Porsche AG stock was trading up 3% from the issue price of 82.50 euros at 1035 GMT.
 

That lifted Porsche AG's valuation to 77.4 billion euros, close to the market capitalisation of Volkswagen as a whole, which is worth around 80.1 billion euros, and puts it ahead of rivals like Ferrari. It is Germany's biggest listing since Deutsche Telekom in 1996.
 

Oliver Blume, in a Reuters interview, brushed aside concerns about his dual role as CEO of both Porsche AG and Volkswagen, saying the decision was made "very consciously".
 

Porsche AG's strong start came despite broadly weaker stock markets following red-hot German inflation data. Shares in Volkswagen and holding firm Porsche SE, which owns a blocking minority in Porsche AG, were down 4.6% and 8%, respectively, as investors switched across.
 

"This is not exactly a dream environment for an IPO today," said Thomas Altmann, a wealth manager at QC Partners.
 

Porsche's flotation comes as European listings are facing their worst year since 2009, as investors fret about a possible global recession amid soaring inflation, rising interest rates and the war in Ukraine.
 

Companies in the region have raised $44 billion from equity capital markets deals up to Sept. 27, according to Refinitiv data, with only $4.5 billion from initial public offerings.
 

"There's a lot to like about the company, with its aggressive electrification plans, expected strong cashflow generation and premium brand positioning in the market," Chi Chan, Portfolio Manager European Equities at Federated Hermes Limited, told Reuters.

 

"However, it is coming to market at a time of unprecedented turmoil and consumer confidence is falling." Porsche AG's Chief Executive Oliver Blume, whose dual role as the new head of Volkswagen has drawn criticism from some investors, hailed the listing as an "historic moment" as he hugged colleagues and rang the bell on a packed Frankfurt stock exchange trading floor.
 

Volkswagen has said the market's volatility was precisely why fund managers were sorely in need of a stable and profitable business like Porsche AG to invest in.
 

"Porsche was and is the pearl in the Volkswagen Group," Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell, said. "The IPO has now made it very, very transparent what value the market brings to Porsche." Faced with tens of billions of costs for a radical shift towards electric mobility and software, Volkswagen executives had long mulled listing Porsche, a move executives hoped would both raise much-needed funds and lift Volkswagen's own value.
 

The Porsche and Piech families, whose holding company Porsche SE controls Volkswagen, will in turn solidify their control over Porsche AG as they will own 25%, plus one ordinary share - carrying voting rights - in the sports car brand.
 

Up to 113,875,000 preferred Porsche AG shares, carrying no voting rights, were sold in the initial public offering.
 

Bank of America, Citigroup, Goldman Sachs and JPMorgan worked as joint global coordinators and joint bookrunners on the deal, while Mediobanca acted as financial adviser to Porsche.
 

($1 = 1.0339 euros)
 

Share Capital

• Share capital was split in two, with 455.5 million ordinary shares and the same number of preferred shares, totalling 911 million shares overall
• Ordinary shares carry voting rights, which matter when it comes to the question of who controls the company
• Preferred shares don’t carry voting rights, but their holders will receive an additional dividend of 0.01 euros apiece on top of every dividend the company pays out

What was sold by Volkswagen?

• Volkswagen sold 25% plus one ordinary share in Porsche AG to Porsche SE, the holding firm, effectively giving them a blocking minority in the namesake brand
• Volkswagen also sold 25% of preferred shares on the market. Qatar, Volkswagen's third-largest shareholder, committed to buy 4.99%, leaving another 20.01%, or 10% of Porsche's total capital, to other investors

Howmuch money did Volkswagen Get?

• Volkswagen's proceeds from the sale of ordinary and preferred shares are 19.5 bn euros ($18.8 bn)
• Firm will call an extraordinary shareholder meet in December where it’ll propose to pay 49% of total proceeds to its shareholders in early 2023 as a special dividend