Volkswagen announces plans for Porsche IPO amid EV push

Pras Subramanian

Volkswagen (VOW.DE) said Monday it will push forward with its IPO plans for sports and luxury carmaker Porsche, a rare bright spot for the IPO market amid a year that has left investors starved for new issues.

The Supervisory Board of Volkswagen says it will pursue an IPO of up to 25% of its non-voting preferred shares in Porsche, which will be listed on the Frankfurt Stock Exchange. In a statement, the company it is targeting the late-September, early-October period for the IPO, subject to market conditions.

“This is a historic moment for Porsche,” said Oliver Blume, Chairman of Porsche and Volkswagen’s newly appointed CEO, in a statement. “We believe an IPO would open up a new chapter for us with increased independence as one of the world's most successful sports car manufacturers. It would strengthen our ability to further execute our strategy.”

Reuters reports Volkswagen is expecting a valuation for Porsche between $60-$85 billion post IPO. Sources also told Reuters Volkswagen may extend the 4-week period for buyers to express interest — otherwise known as a “road show,” or pull the IPO all together, if investors don’t show strong interest.

Porsche Taycan Base
Porsche Taycan Base (Porsche)

Also weighing on the IPO market is the overall performance of equities this year, with the S&P 500 (^GSPC) down 18% year to date. Still, Porsche believes a potential IPO is on track barring a major geopolitical event. Data from PwC published earlier this year showed there were just 57 IPOs in Europe in the first half of 2022, down from 231 in the first six months of 2021.

"You never know what will happen regarding geopolitical issues, but if a potential IPO would be stopped now, we are talking about severe problems," Porsche CFO Lutz Meschke said in a call Tuesday with reporters. "By then, a potential IPO would not be a real issue."

From a capital structure perspective, Porsche will be divided into 50% preferred shares, and 50% ordinary shares which have voting rights. Members of the controlling Porsche and Piech families will retain 25% plus one share of ordinary shares.

Dr. Michael Steiner, Member of the Executive Board Research and Development of Porsche AG, prototypes of the all-electric Macan, Weissach, 2021, Porsche AG
Dr. Michael Steiner, Member of the Executive Board Research and Development of Porsche AG, prototypes of the all-electric Macan, Weissach, 2021, Porsche AG (Porsche)

Porsche says proceeds from the IPO will provide it with independence to “execute its strategy,” meaning its transformation into EVs.

“Porsche’s ambition is for BEVs to comprise over 80% of new vehicles delivered in 2030. As part of its strategy, Porsche is also working towards a net carbon-neutral value chain in 2030 and a net carbon-neutral use phase for future BEV models,” Porsche said in a statement.

The Taycan EV has been a strong seller for Porsche, even outselling the 911 sports car last year. As Porsche looks to expand its EV portfolio, it’s aiming to launch a Macan EV in the next couple of years, as well as electric versions of its 718 Boxster and Cayman models by mid-decade.

From a financial performance point of view, Porsche says it intends to target revenue growth at a 7-9% compound average growth rate, with automotive EBITDA margin in the 25%-27% range.

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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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