Criticism from shareholders: "VW is flying blindly into the electric world"

Created: 2022-12-16, 2:07 p.m

By: Lisa Mayerhofer

Extraordinary General Meeting of Volkswagen AG.

© Carsten Koall/dpa

Many investors rate Porsche AG's IPO in September as a success, but there are still a few unanswered questions.

At the VW general meeting on Friday, there may be another dispute.

Berlin – Porsche's IPO will once again concern the shareholders of the parent company Volkswagen at an extraordinary general meeting on Friday.

At the meeting in Berlin, the shareholders are also supposed to officially decide on public trading in some of the non-voting Porsche preferred shares, which has been going on since the fall.

The decision on the announced special dividend is also on the agenda.

Some owners already criticized the amount and the proposed payment date before the meeting.

Porsche's IPO flushed VW around 9.1 billion euros into the coffers

On September 29, after months of preparation, the Porsche AG shares were launched on the Frankfurt financial market.

The placement of an eighth of the shares in the operating business of the sports and off-road vehicle manufacturer flushed VW into the coffers at the beginning of around 9.1 billion euros.

The money is primarily intended to pay for further investments in electromobility, software and networking technologies.

It was the largest German IPO since Telekom in 1996.

The plan also included that VW's main shareholder - the holding company Porsche SE (PSE), controlled by the Porsche/Piëch families - would receive a quarter plus one share of the voting Porsche stocks.

The PSE should get a blocking minority in central decisions.

She spent about 10.1 billion euros on the shares.

The VW Group management had recommended paying shareholders a special distribution of 49 percent of the total gross proceeds from the IPO of the preferred shares and the sale of the common shares.

According to the planning, that would be 19.06 euros per paper.

The works councils also negotiated extra bonuses for the employees: at Porsche it is up to 3000 euros, for colleagues in the Volkswagen in-house tariff and at VW in Saxony 2000 euros.

Criticism from Deka: "VW is flying blindly into the electric world"

However, there could be a dispute in the discussion about details of the dividend policy.

The savings bank fund subsidiary Deka finds - surprisingly for a shareholder representative - the amount of the distribution planned by the company "much too high".

Volkswagen now needs its money primarily for the further conversion towards e-mobility and digitization, so the argument.

“VW is flying blindly into the electric world, throwing capital overboard unnecessarily.

The real costs of the transformation cannot be predicted, the final strategy of the new CEO Oliver Blume is still in the stars.

Whether the money will be enough remains to be seen.

The special dividend in the proposed amount is excessive and not in the interests of us shareholders," criticizes Ingo Speich, Head of Sustainability & Corporate Governance at Deka Investment.

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The Protection Association of Investors (SdK), on the other hand, insists that the special dividend will flow this month and thus in the 2022 calendar year - and not only in January, as desired by the major shareholder Lower Saxony.

She justifies this with possible tax disadvantages.

Because: "We won't see a big windfall in the state budget because of this"

Lower Saxony's Prime Minister Stephan Weil (SPD), as a member of the VW supervisory board presidium, made it clear to the general meeting that he would stick to his line.

"All parties involved agreed relatively early on that the dividend should be paid out at the beginning of the year (2023)," he told the German Press Agency.

The revenue for the budget is also not as extensive as some suspect: "We will therefore not see any great financial blessings in the state budget." A little more than half of the money automatically goes to the Volkswagen Foundation.

"The country also benefits from this because it promotes research projects."

The funds from the Porsche IPO are also important for a stable location policy, says Weil, because "Volkswagen now has the opportunity again to invest from a strong fund so that there will be modern production facilities in Lower Saxony in the future."

Critics complain about the construction of the IPO that the large owner families use the PSE to consolidate their power in the corporate network.

You could also use the dividend to finance part of the billions spent on the purchase of common shares.

In principle, smaller shareholders have been complaining for a long time that they usually have very little influence over PSE, the state of Lower Saxony and the third-largest shareholder Qatar.

Stock market: Porsche overtakes Volkswagen

The performance on the stock exchange should also be discussed.

While the market capitalization of Porsche AG has now risen to over 93 billion euros, VW AG was recently at just under 80 billion euros.

However, the people of Wolfsburg are still of the opinion that a significant increase in value can be achieved in the medium term.