A Porsche 911 Carrera 4S stands in the evening light in a drive-in cinema on the Porsche factory circuit in Leipzig.
John Woitas | photo alliance via Getty Images
Volkswagen’s management will meet later on Monday to decide whether to proceed with the much-awaited listing of Porsche, as an escalating energy impasse between Russia and Europe has caused major turbulence in the market. market.
Volkswagen will issue a so-called intention to float for the potential IPO in late September or early October, assuming its supervisory board gives the go-ahead when it meets Monday evening.
But the automaker could shorten or extend the four-week period for buyers to express interest, or withdraw its plans altogether, if investors do not express enough enthusiasm for listing, two sources familiar with the negotiations said. .
“That would be the technical green light, nothing more,” one of the sources said of a favorable decision to trigger a listing. “It paves the way, but it would not guarantee that the stock market bell will ring at the end.”
The intention to float is expected to include an offer to retail investors in countries across Europe such as France, Spain and Italy, a source familiar with the negotiations said, in a bid to tap into the loyal fan base. from Porsche.
If investors value the sports car brand at the high end of estimates, ranging from 60-85 billion euros ($60-84 billion), the IPO could be the largest in German history and largest in Europe since 1999, according to Refinitiv data.
Under a framework agreement reached between the two parties in February on the structure of a possible listing, only 12.5% of Porsche shares will be sold on the open market – but even that could generate up to 10, 6 billion euros, according to Reuters calculations.
Stifel analysts said: “VW should work on its timing: the IPO plan was announced the same day Russia invaded Ukraine, the ‘intent to float’ comes out exactly when the Russia stops supplying gas to Germany.”
A framework agreement for a possible Porsche IPO was announced the same week that Russia invaded Ukraine.
Stifel analysts also said the plan was “clearly positive” for Volkswagen and its biggest shareholder, Porsche.
Shares of the two companies fell further with the broader market on Monday after Russia’s decision to halt flows through the Nord Stream 1 gas pipeline indefinitely.
In an internal interview published on Monday, Volkswagen CFO and COO Arno Antlitz reiterated the automaker’s argument that a listing was essential to fund its €52 billion transition to electrification.
Porsche’s status as a specialty luxury brand capable of driving up prices makes it a source of revenue for the Volkswagen Group. Porsche’s operating profit jumped 22% in the first half of this year, in contrast to an 8% decline for the mass market-focused Volkswagen brand.
“This is a key element for the Group, in particular because the eventual income would give us more flexibility to further accelerate the transformation,” Antlitz said in the interview.
But some investors questioned the timing of the stock market debut, with European stocks on a downward spiral, inflation at record highs and Russia shutting off gas supplies.
Luxury automakers are not immune to the stock market slide, with Aston Martin shares falling 11% on Monday, having previously fallen 14% after launching a 575.8 rights issue million pounds ($662.9 million) of four new shares for every existing share.
“The timing is fundamentally wrong,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment, one of Volkswagen’s top 20 investors, declining to say whether Deka would buy Porsche shares. “Market conditions are currently very unfavorable.”