Porsche shortly before IPO: VW announces share prices

Created: 09/29/2022, 05:12

By: Lisa Mayerhofer

It is the most important IPO in Germany for more than 25 years: Porsche dares to go public on Thursday - despite adverse circumstances.

Update from

As Volkswagen announced on Wednesday evening after the end of the subscription period, the carmaker will collect almost 9.4 billion euros with the IPO of its subsidiary Porsche.

The preferred shares will be issued to investors for EUR 82.50 each, at the upper end of the previously announced range of EUR 76.50 to EUR 82.50 per share.

The IPO of Porsche AG is the largest initial public offering in Germany since Telekom in 1996.

On Thursday, around 114 million of the 911 million Porsche securities can be traded on the stock exchange.

This includes almost fifteen million shares to cover over-allotments.

Based on the issue price, Porsche AG achieves a market capitalization of almost 75 billion euros - which is ultimately less than was expected before the recent stock market turbulence.

Still, it's still within the range of what analysts recently forecast.

For comparison: the stock market value of the parent company VW was around 84 billion euros.

Porsche shortly before IPO: Share prices expected at the upper end

First report from September 28:

Stuttgart/Frankfurt – Despite nervous financial markets, Porsche dares to make a big entrance: On Thursday, the German sports car manufacturer will go public on the Frankfurt Stock Exchange.

The price range per share is between EUR 76.50 and EUR 82.50.

According to information from the

, however, the share is expected to come onto the market at the upper end of the price range.

Porsche parent Volkswagen hopes for proceeds of 9.4 billion euros

Almost 114 million preferred shares are to be placed; those who have bid less than the issue price will not receive any shares.

The shares will be distributed among those who subscribed at the issue price or higher.

The Porsche parent Volkswagen hopes for proceeds of 9.4 billion euros from the IPO and a valuation of the car manufacturer of up to 75 billion euros.

The company's valuation is thus below previous estimates by the VW parent - but still well above that of other competitors: BMW and Mercedes are valued at 49 billion euros and 61 billion euros respectively, even though they produce significantly more cars than them Sports car brand from Zuffenhausen.

Porsche: Most important German IPO since Telekom

Measured by the value of the shares, Porsche's flotation is the most significant in Germany since Deutsche Telekom went public in 1996. At the European level, it is considered the largest since the Swiss commodities group Glencore went public in 2011.

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For the IPO, Porsche's share capital was divided equally into preference shares and ordinary shares.

Anyone who owns preferred shares does not have voting rights at the general meeting, but there is usually a higher dividend.

The stock types are traded at different prices.

It is planned that up to 25 percent of the preference shares can be acquired by investors, including institutional investors and private investors in Germany and other European countries.

Porsche Automobil Holding SE would also acquire 25 percent plus one of the ordinary shares in Porsche AG from Volkswagen AG – and thus a blocking minority in the sports car manufacturer.

Investor interest is high: for example, the state investment funds in Qatar and Abu Dhabi, the Norwegian sovereign wealth fund and the US investment company T. Rowe Price have announced that they will subscribe to preferred shares with a total value of 3.6 billion euros - the largest investment is coming from Qatar.

Will Porsche's IPO be a success?

The carmaker is likely to invest the money collected in the further expansion of electromobility: by 2030, more than 80 percent of newly delivered vehicles should be fully electric.

The manufacturer of the legendary 911 model already has experience - the electrically powered Porsche "Taycan" has been the brand's best-selling model since this year, and an electric version of the Porsche "Macan" is scheduled to come onto the market in 2024.

Whether the IPO will be a success depends on what is currently still a “difficult economic environment”, as auto expert Ferdinand Dudenhöffer emphasizes.

War in Ukraine, inflation, impending recession and rising interest rates - currently is "not the best time for an IPO" and there are "few arguments to inspire investors to buy shares".

Nevertheless, Porsche and the IPO marked an "international appreciation of German engineering" and the potential for stock market success was there.

Volkswagen might be hoping for some shine from it.

The group's stock market value is currently around 90 billion euros - only a fraction of the valuation of its large US competitor Tesla, which is around 900 billion dollars.