Porsche AG shares are set to begin trading Sept. 29 in one of the largest European public listings in years, raising up to $9.4 billion and valuing the sports car maker at as much as $78 billion.
Porsche’s parent, German car giant Volkswagen AG, priced the public offering of preferred stock in line with average analyst expectations. Combined with a private sale of Porsche ordinary stock to VW’s largest investor, Porsche Automobil Holding SE, the sale of 25% of Porsche could raise €19.5 billion for VW, the equivalent of $19.5 billion.
VW said it plans to distribute nearly half the gross proceeds from the combined Porsche share sale to its shareholders in a special dividend.
The listing could test investor appetite for further offerings in a market that has been weighed down by soaring inflation, the war in Ukraine, and fears of a global recession.
VW sought to walk a line between maximizing proceeds and ensuring a successful IPO in difficult market conditions, analysts said. The price range for Porsche’s preferred shares between €76.50 and €82.50, is largely in line with investor expectations.
In a reference to Porsche’s iconic 911 sports car model, VW created 911 million Porsche shares, divided evenly between nonvoting preferred shares and ordinary shares with voting rights.
VW is selling 25% of Porsche preferred shares, or about 12.5% of the entire company, to investors in the public offering. Roughly the same amount of ordinary shares are being sold to Porsche SE, VW’s largest shareholder and the listed investment fund majority owned by Ferdinand Porsche’s heirs.
The deal will put Porsche shares in public hands for the first time since VW acquired the company in 2012, after Porsche’s failed attempt to use its higher market valuation to acquire its larger cousin.
The deal returns effective control of Porsche to the founder’s heirs, who will own 25% plus one share of Porsche’s voting stock, giving them a blocking minority in Porsche board meetings and at the annual general meeting. Porsche SE has agreed to purchase the Porsche voting stock at the same price as the IPO plus a 7.5% premium. Porsche SE said it would finance the share purchase with up to €7.9 billion in debt.
The final amount of debt would be determined by the final IPO price and the amount of Porsche SE’s share of the special dividend.
With total proceeds of up to €19.5 billion, VW will retain nearly €10 billion in gross proceeds from the sale of Porsche shares after distributing the special dividend to its shareholders.
Chief Finance Officer Arno Antlitz has said the money raised from the Porsche share sale will be used to finance its transformation to an electric car maker. The additional financing gives VW more time to build a network of battery factories before taking on outside investors in its battery company. VW is building at least six battery factories in Europe alone.
Some investors have criticized the way in which the Porsche share sale is structured, saying it cemented insider control of both VW and Porsche. In addition, a large portion of the IPO, the sale of nonvoting preferred stock, will go to a small group of investors, leaving a small amount of Porsche’s preferred shares to trade freely.
Together, Qatar Investment Authority, which is also a core VW shareholder, Norway’s Norges Bank Investment Management, T. Rowe Price and ADQ, an investment arm of the Abu Dhabi government, have committed to acquire at least €3.54 billion worth of Porsche’s preferred shares, according to the marketing material.
This story has been published from a wire agency feed without modifications to the text