Volkswagen expected to stamp Porsche IPO milestone plan -source

Visitors look at the 2022 Porsche 718 Cayman GT4 RS at the 2021 LA Auto Show in Los Angeles, California, USA on Nov. 17, 2021. REUTERS/Ringo Chiu

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HAMBURG/FRANKFURT, Sept. 5 (Reuters) – Volkswagen’s supervisory board (VOWG_p.DE) is expected to approve a plan to list sports car maker Porsche in a much-anticipated IPO, a person familiar with the matter told Reuters on Monday. .

The board is currently in session and is expected to vote for listing, the person said.

Volkswagen declined to comment.

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The green light would come at a difficult time for investors: an escalation in an energy dispute between Russia and Europe has caused major market turbulence.

The car manufacturer will publish an ‘intention to float’ for the possible IPO at the end of September or early October, assuming that the supervisory board gives the green light. read more

But it could shorten or extend the four-week window for buyers to show interest, or withdraw the plans altogether, if investors don’t express enough enthusiasm, two sources close to negotiations said.

“It would be the technical go-ahead, nothing more,” said one of the sources. “It clears the way, but this would not guarantee that the stock market bell will eventually ring.”

The intent to float is expected to include an offer to retail investors in countries in Europe, including France, Spain and Italy, two sources close to negotiations said in an effort to tap into Porsche’s loyal fanbase.

Volkswagen will also decide whether 25% plus one share of the common stock in Porsche AG will be sold to Porsche SE, as stipulated in a framework agreement between the two parties in February. read more

That would leave the Porsche and Piech families, who control Porsche SE, a blocking minority โ€” reinforcing their push for greater control under new Chief Executive Oliver Blume.

‘CLEAR POSITIVE’ Under the February framework agreement, 25% of the preferred shares will be sold on the open market, equivalent to just 12.5% โ€‹โ€‹of Porsche’s total capital. Even that could yield up to 10.6 billion euros, according to calculations by Reuters.

Ordinary shares, which are planned to be held solely by Volkswagen and Porsche SE, would not be listed on the stock exchange.

Investors expect valuations between 60 billion and 85 billion euros, with the most optimistic pointing to the strong Porsche brand and others highlighting the free-fall valuations of other luxury carmakers such as Aston Martin and Ferrari.

At the top of the estimates, the IPO could be the largest in German history and the largest in Europe since 1999, data from Refinitiv shows.

Qatar Investment Authority, which owns 10.5% of Volkswagen and 17% of its voting rights, will also become a strategic investor in Porsche AG’s preferred shares in an IPO.

But some investors say with European equities in a tailspin, inflation at record highs and Russia cutting off gas, it’s a dangerous time for a stock market debut.

“Market conditions are very unfavorable at the moment,” said Ingo Speich, head of sustainability and corporate governance at the top 20 Volkswagen investor Deka Investment, who declined to comment on whether Deka would buy Porsche shares.

Stifel analysts said: “VW should work on the timing. The plan for the IPO was announced the same day Russia invaded Ukraine, the ‘Intention to Float’ comes out exactly when Russia stops supplying gas to Germany.”

The German Automobile Association expects a 4% decline in passenger car deliveries in Europe this year, with the hoped-for recovery after the pandemic yet to come. read more

Stifel’s analysts also said the plan was “clearly positive” for Volkswagen and top shareholder Porsche SE (PSHG_p.DE).

Volkswagen has repeatedly argued that a stock market listing is the key to financing the EUR 52 billion transition to electrification.

Porsche’s status as a luxury brand capable of driving up prices makes it a moneymaker for the Volkswagen Group. Operating profit rose 22% in the first half of this year, as opposed to an 8% decline for the mass-market Volkswagen brand.

Shares in both companies still fell along with the broader market on Monday following Russia’s move to indefinitely suspend flows through the Nord Stream 1 pipeline. read more

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Reporting by Paul Carrel, Victoria Waldersee, Jan Schwartz; Emma-Victoria Farr, Christoph Steitz, Ilona Wissenbach in Frankfurt Supplementary writing by Tom Sims; Editing by David Evans, Matt Scuffham and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

Emma-Victoria Farr

Thomson Reuters

Reports on European M&A with previous experience at Mergermarket, Bloomberg The Daily Telegraph and Deutsche Presse Agentur.

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