Porsche’s IPO puts the founding family in the driver’s seat

YesYou may not be able to buy a Porsche, but you will soon have the chance to own part of the business.

Parent company Volkswagen (DE:VOW3, US:VWAGY) said on Monday it would launch its plan to sell 12.5% ​​of the iconic German luxury sports car company in an initial public offering as of this month, valuing the company between $60 and $85. billion.

Porsche also said it was selling 12.5% ​​of Porsche’s equity directly to the heirs of the Porsche family, which are VW’s major shareholders.

The shares offered to the public have no voting rights, unlike the shares of the Porsche heirs.

Volkswagen said the proceeds will help it fund the transition to electric vehicles and 49% will go to shareholders as a special dividend.

The move surprised many market participants who expected the company to postpone the deal and wait for better market conditions. Persistent inflation and global economic tensions, coupled with the war in Ukraine, created a disorderly market, and IPOs were rare.

But Volkswagen may not be taking a huge risk. Porsche is a high-end company, and while spending habits at more modest income levels are strained, makers and dealers of luxury and rare goods are doing land office business.

“This is a historic moment for Porsche,” said Oliver Blume, CEO of Volkswagen and Porsche.

Porsche sales rose 11% in the last business year and topped 300,000. That’s just three percent of VW’s passenger car sales, but it’s half of the company’s pretax profit. on passenger cars.

So the multi-billion dollars it will earn from the bid will fund the further development of its all-electric Taycan and the transition to 80% electric in the Porsche lineup by 2030.

Porsche’s turnover reached 33.1 billion euros last year and brought in 16% on sales.

The Wall Street Journal reported on Tuesday that the family investment fund, Porsche SE, also agreed to pay VW a premium of 7.5% above the IPO price. The family’s actions now give Porsche SE effective control over board decisions.

Reports earlier this summer indicated VW was planning to launch a new electric SUV and pickup truck to showcase its new Scout brand.

Volkswagen wants to break into the highly profitable U.S. truck and SUV market, bolstering its international presence as some parts of the global economy slow more than others.

VW’s sales in the United States fell sharply in the first quarter and the company holds only 5% of the market. Now the company will have some capital to support growth.

A successful strategy could make VW a direct rival to American off-road stalwarts like Ford and General Motors. VW would also compete with electric vehicle startups like Rivian. According to recent reports, VW would like to sell around 250,000 Scout vehicles a year in the United States once production, estimated for 2026, begins.

By Greg Morcroft for Fintel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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