Porsche IPO: The iconic luxury carmaker hits the market

written on September 28, 2022

Porsche will be listed on the Frankfurt Stock Exchange tomorrow, Thursday 29th September 2022, with ticker symbol P911. Limit orders for the new Porsche shares can be placed from today on Moneybase Invest or through your financial advisor at Calamatta Cuschieri.

The price range for shares is set at EUR 76.50 to EUR 82.50 per share with more recent updates suggesting that the iconic brand listing price is veering towards the higher end of the spectrum, EUR 82.50, following indications of strong investor demand.

With car company IPOs being few and far between, the news that Volkswagen AG plans to list its Porsche brand has been heralded as not only a market-breaking event in Europe but one of the largest listings in the world, eliciting interest from both auto enthusiasts and investors.  

Listing shares in Porsche is intended to help VW raise money to invest in electric vehicles and its push into developing software as it tries to catch up with Tesla.

Porsche Market Cap

Experts are expecting the sports car to hit the market with a whopping 75 billion Euro valuation, making it among the largest in both German and European stock market history.  

The IPO is said to attract more than 1 Billion Euros of retail orders. Investor orders below 82.50 euros might miss out on the transaction, according to Bloomberg since indicated demand for the offering is exceeding the deal size.

As far as luxury cars go, Porsche’s estimated market cap is likely to place it just under its parent company, Volkswagen, at $93 billion, and ahead of industry giants Ferrari and Ford, capped at $39 billion and $61 billion, respectively.

In terms of the broader spectrum of European offerings, Porsche will place fourth after big energy names like French gas and electricity supplier, EDF, Italy’s Enel, and Rosneft Oil, and telecommunications corporation, Orange.

Volkswagen has indicated that its expected profits from the IPO of its sports car, which could reach up to €10.6 billion, would help fund the mother company’s transition to electric vehicles and driverless cars. 

Porsche Share Structure 

Porsche’s share structure will parallel that of Volkswagen, comprising both voting and non-voting shares. The 911 million shares will be divided equally into preferred and ordinary shares, with 455.5 million shares each way. Although IPO investors are currently only being offered a 12.5% stake via non-voting preferred shares, investors can look forward to a special dividend to be paid out at the start of 2023 if Volkswagen’s Porsche bid turns out to be successful.

Common shares which carry voting rights will be sold to Porsche Automobil Holding SE and bring back the Porsche and Piech family, the former company owners before Volkswagen’s acquisition, back to the table. Over ten years ago, the luxury vehicle family business had attempted to take hold of Volkswagen, before the financial crisis decimated funds and turned the deal on its head, although the Porsche family retain a controlling interest in the company.  

Porsche SE currently holds 53% of Volkswagen voting rights, and the IPO will see Porsche SE receive a special dividend as it seeks to buy a blocking stake of 25% and one share in the listed sports car. 

Should I invest in Porsche?

The luxury carmaker’s business is currently thriving, with expectations that 2022 will be another profitable year for Porsche as it brings in $39 billion in sales. With average figures hitting 300,000 vehicles a year, Porsche hopes to woo the market with its combination of luxury appeal and scaled-up production. It is also the main generator of profits at Volkswagen AG, substantially ahead of Audi and bringing in more than four times as much as Skoda and the Volkswagen brand. While all this bodes well for Porsche’s IPO, market sentiment, which is already strong, may still be partially lagging behind in the enthusiasm. 

One challenge Porsche faces is current microchip supply shortages and the energy crisis in Europe might give Porsche’s otherwise solid entry to the market a shaky start. 

Aside from market timing, there are also a few details regarding Volkswagen’s management structure and share offering that investors have been paying attention to. The fact that Oliver Blume, Volkswagen’s CEO since September 2022, will take on the additional role of Porsche CEO once the company goes public is a surprising move that raises questions about management efficacy.

In a prospectus published last week , Porsche revealed the data behind the models that shaped its reputation, but it also listed the risks its potential investors should bear in mind, given current market conditions. The energy crisis sparked by the war in Ukraine, among other factors noted above, could lead to higher production costs which Volkswagen has already started bearing the brunt of. And yet, Volkswagen needs the funds from Porsche’s IPO as it transitions to electric, a move which is estimated to cost the parent company €52 billion. Analysts also agree that if there is one IPO that could brave the stormy financial weather the markets have had to contend with, it would be Porsche. 

The upcoming stock is poised to turn into a strong long-term auto investment with many investors hoping that buying Porsche shares could bring them a repeat of Ferrari’s successful 2015 IPO, given the parallels between the two companies. While Ferrari’s share price might have dipped this year, its shares are still up over 200% since its public offering seven years ago. Considering the possible gains Porsche stands to make, investors will be looking closely at its quarterly fiscal reports over the coming months. 

Porsche’s offering also stands out as one of the few IPOs European markets have seen this year and its sheer size places it in a league of its own. Its promising valuation means that even Volkswagen’s home-turf competitors, Mercedes-Benz and BMW, pale in comparison.

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