VW group agrees financial strategy: Porsche is to go public

In its search for additional billions for the expansion of electric mobility, the VW Group is now specifically considering an IPO for its high-yield product, Porsche. For years, the sports and off-road vehicle brand from Stuttgart has made a major contribution to the profits of Europe’s largest car group. Owners and management have so far left it unclear whether shares in Porsche AG will be released for public trading on the financial market.

Volkswagen AG and Porsche Holding SE (PSE) announced on Tuesday that “advanced talks” were being held about a possible IPO for Porsche AG. VW and Porsche SE had negotiated a cornerstone agreement – as a basis for further steps. However, a decision has not yet been made.

The PSE primarily manages the shares of the owner families in the VW Group. An important link between the two sides is formed by the head of the VW supervisory board, Hans Dieter Pötsch, who is closely networked with the Porsche/Piëch clan and also heads the PSE.

Hope for stock market upswing

Volkswagen CEO Herbert Diess is said to have been exploring several options for some time in order to get extra capital for investments in the coffers. A high double-digit billion sum is already planned for the next five years, if you only take into account the projects for e-cars, software and digital platforms.

Should Porsche shares come onto the floor, this could increase the stock market value of Volkswagen AG in addition to its own financial strength. Compared to their US rival Tesla, the German industry heavyweights have recently been bobbing around in the international midfield. To change that, the lucrative daughter could play an important role. The operational business with models such as the 911, Cayenne or electric car Taycan is bundled in Porsche AG.

Investors are always putting pressure on Porsche to become independent because the value of the brand under the umbrella of the group is not sufficiently emphasized. The official announcement of the deliberations caused the prices of the existing shares to rise significantly on Tuesday. The VW share increased by almost ten percent in the morning. The Porsche SE share price also increased. It rose by around 13 percent. A year ago, rumors about a Porsche IPO had intensified and caused VW shares to soar. In the months that followed, however, things went down again.

The Porsche-Piëch family has 53 percent of the voting rights in VW

The PSE is the institutional power center in the Wolfsburg-Stuttgart network. It is controlled directly by the Porsches and Piëchs – and the current generation change could bring a lot of movement in the strategic direction. The holding company currently owns a good 53 percent of the voting rights in the VW Group. Porsche AG fought a takeover battle with the much larger car manufacturer VW in 2008, and in the end the Lower Saxony company turned the tables and swallowed up the attacker from the south-west. In return, the two families had received the majority in the then newly forged car giant.

With its two luxury class subsidiaries, Audi and Porsche, the VW group makes the biggest profits. Porsche, in particular, shines with high returns, which could also make shares interesting for those who have not been there before. At least that’s how the big professional investors calculate it. The analysis goes like this: If Porsche is valued individually on the stock exchange, the value of the car manufacturer from Stuttgart-Zuffenhausen could develop more freely and also give the VW shares themselves a boost.

The latter would also be in the interests of Diess, who would like to see Volkswagen catapulted close to stock market stars like Tesla. From the point of view of some observers, the expectations of the large competitor from the USA seemed a bit exaggerated, in autumn Tesla was worth over a trillion US dollars. At the moment, the entire VW group, including the strong increase after the VW announcement, only comes to around 115 billion euros. Porsche alone could be worth at least 50 to 60 billion euros, in the best case maybe even up to 100 billion euros, the company said.

The creation of financial market-listed offshoots of large corporations is in vogue. VW’s competitor Daimler, for example, has just separated its business with trucks and buses from the car division. The logic: considered separately, both units are more agile and ultimately more profitable.

Porsche with significant growth

Even last year, which was burdened by the semiconductor crisis, Porsche was able to increase global deliveries by eleven percent to around 302,000 cars. Sales manager Detlev von Platen is aiming for further growth this year. In contrast, sales of the core brand VW passenger cars fell by eight percent.

With a Porsche IPO, the owner families could get more direct access to the car manufacturer with their name. There should also be a blocking minority in the discussion. On Tuesday, the PSE immediately declared that it would also be able to acquire ordinary shares in Porsche AG in the event of an IPO.

Sources: DPA, Handelsblatt