Porsche separates from VW and goes public | Business | Economic and financial news from a German perspective | DW


When a huge freighter loaded with Porsches, Bentleys, Lamborghinis and Volkswagens burned for nearly two weeks before sinking in the Atlantic Ocean earlier this year, it could have been seen as a bad omen.

But Volkswagen, which owned the vehicles, was preparing a Porsche IPO and was unfazed by the luxury disaster. Today, the automaker moved ahead with plans announced in February to list its Porsche subsidiary on the Frankfurt Stock Exchange. The first day of trading is September 29.

Volkswagen’s decision to list its prized Stuttgart-based Porsche brand as a separate company could net between 8.7 billion euros ($8.4 billion) and 9.39 billion euros, according to initial calculations by the company. Others have estimated that it would earn more and value Porsche up to 75 billion euros, almost as much as all of VW currently.

This would make it one of the largest IPOs ever in Europe at a time of otherwise bleak economic prospects, volatile stock markets, rising interest rates and high inflation. It could also make the company more valuable than rivals BMW and Mercedes. So much rests on little Dr. Ing. hc F. Porsche AG, official company name.

What does Porsche offer?

In the end, the VW-Porsche split is not a real divorce, but rather a partial separation. Volkswagen is more interested in unlocking Porsche’s true potential and will only offer part of the stock and retain the majority.

Porsche has a long history of making fast and stylish sports cars

Half of the shares will consist of preference shares without voting rights and the other half of ordinary shares with voting rights. Of this number, 25% of the preferred shares are reserved for investors, which means that approximately 12.5% ​​of the entire company will be open to non-voting investors.

VW’s major shareholders, the Porsche and Piëch families, will buy 25% plus one of the ordinary shares, again around 12.5% ​​of the entire company.

So far, the Qatar Investment Authority has expressed interest in buying a large block of shares. Other institutional investors confirmed by VW are Norges Bank Investment Management, T. Rowe Price and ADQ. As for private investors, preferred shares will be offered to people in Germany, Austria, Switzerland, France, Italy and Spain.

What’s wrong with Porsche?

As well as being an iconic brand, Porsche is a slot machine on four wheels. Last year, it delivered 301,900 vehicles. The total turnover amounted to 30.3 billion euros and the operating profit to 5 billion euros. This was a big increase on the previous year and accounted for nearly a quarter of all Volkswagen Group profits, money that will be missed after part of the profitable subsidiary is sold.

During the same period, the 10-brand Volkswagen Group delivered 8,882,000 vehicles to a total of 153 countries. The overall turnover was 250 billion euros; profit after tax amounted to 19.2 billion euros.

For its part, Porsche has moved away from traditional sleek sports cars to include sedans and SUVs. Currently, they offer six performance models: 718, 911, the battery-powered Taycan, Panamera, Macan and the Cayenne. Based on manufacturer’s suggested retail prices in Germany, the base model 718 is the cheapest starting at just over €59,000. The most expensive model is the famous 911 with a base price of €113,000.

The back of a Porsche 911

Going electric is the automaker’s biggest challenge, but it’s not the only one in this dilemma

The big challenge today is to make fast, reliable and now battery-powered sports cars. Last year, Porsche managed to deliver 41,300 battery electric vehicles, nearly double the previous year.

“Heritage matters a lot in the luxury segment. These buyers appreciate the pedigree that a brand like Porsche offers. Startups or new entrants don’t have that kind of heritage. But electric cars represent a game changer. paradigm, where all internal combustion engine manufacturers lose whatever technical advantage they had,” Detroit-based industry expert John McElroy told DW. “It opens the door to new entrants that provide a different and better driving experience.”

Who owns Porsche now?

The history of Porsche and Volkswagen is long and complicated. Porsche was founded by Ferdinand Porsche in 1931 with associates, Adolf Rosenberger and Anton Piëch. It had a rough start and was active in World War II military production. After the war, under the leadership of Ferry Porsche, it captured the zeitgeist and accelerated to become an established sports car manufacturer.

For decades Porsche worked closely with VW, but they were separate companies. Porsche remained relatively small but made huge profits. Then, in 2008, he attempted to take over VW in a David and Goliath move. It was a prideful decision and Porsche failed in its offer and nearly went bankrupt. In 2012, VW ended the fight and rescued Porsche in its own takeover, a move that left the Porsche family with the majority of Volkswagen’s voting shares.

Today, by releasing the sports car manufacturer and guaranteeing the founding family a majority stake, the story is reversed. The heirs of the founder will regain control of the company that bears their name.

Why sell part of Porsche?

There are a number of reasons why VW may want to sell part of Porsche. Here, all signs point to desperately needed – and costly – investments in electric vehicles, autonomous driving, software development and batteries.

Another reason is simply to clean up its wide range of brands and focus on those that need more attention. In a statement, VW said “the existing industrial and strategic cooperation between Volkswagen AG and Porsche AG will also be continued.” This means sharing development costs and vital parts between brands.

For Porsche, the reasons for parting ways are likely two-fold: family interests and moving to electric vehicles more quickly. “Porsche needs to invest in electric batteries, new electronic architecture and advanced connectivity, and other areas. By raising capital on its own, it will be free to invest as it wishes and not have to to depend on the [VW] group to get the money,” McElroy said.

“So far Porsche has done a good job with the Taycan,” he said. “Now the challenge is to extend this EV success across the rest of the lineup.”

Edited by: Hardy Graupner


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