Volkswagen announces plans to IPO Porsche amid EV push

Volkswagen ( VOW.DE ) said on Monday it would advance its IPO plans for sports and luxury car maker Porsche, a rare bright spot for the IPO market amid a year that has left investors hungry for new issues .

Volkswagen’s Supervisory Board says it will seek an IPO of up to 25% of the non-voting preference shares in Porsche, which will be listed on the Frankfurt Stock Exchange. In a statement, the company targeting the period of late September, early October for the IPO, under market conditions.

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

Reuters reports that Volkswagen expects a valuation of Porsche between $60-85 billion after the IPO. Sources also told Reuters that Volkswagen may extend the four-week period for buyers to express interest — otherwise known as a “road show” or pull the IPO altogether if investors don’t show strong interest.

Porsche Taycan base

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

“You never know what will happen regarding geopolitical issues, but if a potential IPO is stopped now, we are talking about serious problems,” Porsche Chief Financial Officer Lutz Meschke said on a call Tuesday with reporters. “Until then, a potential IPO would not be a real issue.”

In terms of capital structure, Porsche will be divided into 50% preferred shares and 50% common shares that have voting rights. Members of the controlling Porsche and Piech families will retain 25% plus one share of common stock.

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

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

Porsche says the proceeds from the IPO will give it independence to “execute its strategy,” namely its EV conversion.

“Porsche’s ambition is for BEVs to make up over 80% of new vehicles delivered in 2030. As part of its strategy, Porsche is also working towards a carbon-neutral clean value chain in 2030 and a clean-use phase carbon neutral 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 aims to launch a Macan EV in the next two years, as well as electric versions of the 718 Boxster and Cayman models by mid-decade.

In terms of financial performance, Porsche says it plans to target revenue growth at a compounded average growth rate of 7-9%, with an EBITDA margin for cars in the range of 25%-27%.

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

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