Porsche becomes the largest IPO to be carried out in Europe
Porsche AG along with its consolidated subsidiaries Porsche Group has profitably completed its Initial Public Offering (IPO). With the initial listing at Frankfurt Stock Exchange, Porsche becomes the largest IPO to be carried out in Europe in terms of the market capitalization of around 78 billion euros, as the calculated value of the offer price for the preferred shares and the corresponding value for the common shares.
The parent organization Volkswagen AG will receive all the proceeds from the listing and has a market capitalization of 81 billion euros and the shares rose to 84 euros at the opening after Volkswagen priced the shares at 82.50 per piece. Volkswagen is placing 113,875,000 non-voting preferred shares with no par value of Porsche AG in IPO.
The company announces that preferred shares are placed to correspond to 12.5 percent of Porsche AG’s issued and outstanding share capital. Trading of the preferred shares on the regulated market of the stock exchange will be taking place under the trading symbol “P911″, the German Securities Code “PAG911” and the ISIN “DE000PAG9113”.
Porsche Chief Executive Officer Oliver Blume says that with the successful completion of the IPO, the company is beginning a unique chapter in its history. Porsche IPO is also creating relief in a market for listings that have been inactive in the year due to inflation and fluctuations in interest rates and a looming threat of global recession backs off most investors.
During the meeting with potential clients, Volkswagen put forward the listing as an opportunity to invest in a company that makes the best of car making and luxury. Volkswagen targets wealthy buyers like Porsche and delivers a fraction of Porsche’s annual sales.
The company will gain great entrepreneurial freedom as Initial Public Offering (IPO) opens. While the domination agreement and profit and loss transfer statement with Volkswagen is expected to expire by December 2022, it will be replaced by an Industrial Cooperation Agreement (ICA) and on this basis, Porsche and Volkswagen will govern their future industrial and strategic relationship.
Sustainable and value-creating development of Porsche AG is the goal of both Porsche and Volkswagen. Deputy Chairman of the Executive Board and Member of the Executive Board for Finance and IT at Porsche AG, Lutz Meschke says that they are working together with determination to fulfill their long-term goals and strategies, where they can have a grip on having the best benefits of both the companies: “the advantages of our luxury positioning and the synergies with the Volkswagen Group” says Lutz Meschke.
The motor vehicle manufacturing company is setting up ambitious goals socially, economically, and ecologically with IPO. Oliver Blume states that the group aims to re-evaluate the concept of luxury by combining it with sustainability and social commitment. He further adds that along with the company’s aim of growing its luxury products and services, it also intends to be socially committed. The firm also aims to be at the forefront as a leader when it comes to electromobility as the company is setting ambitious goals for its future.
Returns of the company are expected to climb above 20% in the long term. Private investors of Porsche obtain around 7.7% of the placement volume. The investors of Porsche will be able to subscribe to 20% of preferred shares which carry no voting rights.
The company is working toward a net carbon-neutral value chain in 2030 and a net carbon-neutral use phase for future BEV models as they aim to have over 80% of the new vehicles be Battery Electric Vehicles (BEVs) in the next decade. They are targeting proceeds of as much as 39 billion euros this year and a return on sales of around 18%, which is a two-point up from the previous year as per the company statements in July.