German automotive giant Volkswagen (VWAGY) is moving ahead with plans to hold an initial
public offering (IPO) of its Porsche sports car unit despite the current market downturn.
Volkswagen remains determined to hold what many analysts expect to be one of the biggest
IPOs of the year amid record inflation and an energy crisis that has sent European stocks
sharply lower this year.
The carmaker published its intention to float an IPO in late September or early October to be
completed by the end of the year but added that the listing’s timing was “subject to further
capital market developments.”
Volkswagen said in media interviews that it may extend the four-week period for buyers to
express interest in the Porsche IPO, or pull its plans altogether, should investors not show
enough enthusiasm to make the listing financially beneficial.
Investors and analysts expect a valuation for Porsche of about $85 billion U.S. The IPO is
expected to be one of the largest in German history and the biggest in Europe since 1999.
The Government of Qatar will be a main investor in Porsche, committing to buy a 5% stake in
the newly listed car company.
Preferred shares will be offered to retail investors in countries such as France, Spain and Italy,
an attempt to tap into Porsche's fan base.
Volkswagen has said that an IPO of Porsche will mark a significant step in its transformation to
an electric vehicle manufacturer.
Porsche's status as a luxury brand able to bump up prices makes it a money maker for
Volkswagen. Porsche’s operating profit jumped 22% in the first half of this year, in contrast to an
8% drop at the mass market Volkswagen division.
But some analysts question the IPO’s timing given the current market conditions, saying it’s an
uncertain time for a stock market debut.
Volkswagen’s stock is down 18% this year and trading at EURO 147.94 (CDN $192.85).
