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Porsche’s much-anticipated yet delayed IPO finally debuted on Thursday, September 29, 2022. During one of the largest European initial public offerings in history, Porsche’s opening IPO shares wasted no time in rising upon the Frankfurt debut, albeit perhaps modestly so.
The Stuttgart luxury- and sports-car manufacturer’s initial shares opened at 84 euros ($81). These shares garnered a 3 percent gain — in spite of across-the-board declines among anemic global markets.
P911.DE — What’s in a Stock Symbol Name?
On the eve of Volkswagen’s spinoff of the Porsche IPO offering, the deal’s underwriters set top-of-the-range pricing Wednesday at 82.50 euros. This translates to a company valuation of approximately 77 billion euros, or $75 billion.
“We were convinced despite the challenging environment this IPO would prove successful, and we were right.”
Success despite Economic Chaos
The auspicious Porsche IPO debut was the largest in Germany since Deutsche Telekom’s (DTEGn.DE) listing in 1996. It set precedent as a market landmark in spite of — or perhaps because of — the stiff, clashing global-market headwinds that its opening faced.
These include such adverse economic tribulations as:
- The war in Ukraine
- Supply-chain bottlenecks, and
- The foreboding lackluster IPO performance of luxury OEMs Aston Martin, BMW, Ferrari and Mercedes-Benz
“We were convinced despite the challenging environment this IPO would prove successful, and we were right,” announced Volkswagen’s Chief Financial Officer, Arno Antlitz.
In an understandably celebratory mood, Mr. Antlitz enthused, “Today is a great day for Porsche and a great day for Volkswagen,” as stated to CNBC’s Annette Weisbach on Thursday.
Among other assertions, some of Mr. Antlitz’s concluding pullquotes regarding the deal invoked Porsche’s “strong financials” as well as “a very convincing strategy for the future.”
Porsche and Volkswagen’s foremost objectives in introducing the offering involve substantial investments in its aggressive plans for digitization and vehicle electrification.
The IPO sold roughly 113,875,000 Porsche AG preferred shares, carrying no voting rights, to the public.
Laying the Initial Groundwork
As prelude to the deal, holding company Porsche Automobil Holding SE (PSHG_p.DE) laid the groundwork for the Porsche IPO offering. Among its roles as a holding company, Porsche SE currently controls Volkswagen Aktiengesellschaft (Volkswagen AG).
Thus Porsche SE and Volkswagen AG crafted a share purchase agreement, paving the way for the Porsche IPO. The final deal granted 25 percent, plus one share of the ordinary shares, in Porsche AG vis-à-vis the new Porsche IPO.
Descendants of legendary Porsche founder Ferdinand Porsche, the Porsche and Piëch families via Porsche SE are majority shareholders of Volkswagen AG. The families in turn solidified their operating influence over the business affairs at Porsche.
The Deal Behind the Deal
Through the IPO, Volkswagen sold 12.5 percent of stock in Porsche to the public as non-voting shares. Four major investors — Abu Dhabi, Norway, Qatar and American money manager T. Rowe Price — bought roughly 40 percent of these shares.
The Porsche and Piëch families, along with the majority shareholders of Volkswagen, acquired another 12.5 percent of Porsche stocks — precious voting shares.
Consequently, the Porsche and Piëch families own 25 percent of these shares. They now possess the needed voting power to veto any business decisions that they perceive as averse to Porsche’s relentless ongoing mission since its founding.
Win-Win for All Parties
So this 25 percent, plus one share of ordinary shares, in Porsche AG adds up to approximately 10.1 billion euros. All told, the IPO’s listing shares yield Porsche a financial infusion of close to 19.5 billion euros. This was intended to pave the way for more financial flexibility in terms of developing digitization and electric vehicles.
Dr. Wolfgang Porsche, Chairman of the Supervisory Board of Porsche SE, and Dr. Hans Michel Piëch, Deputy Chairman of the Supervisory Board of Porsche SE, issued a joint statement on the Porsche IPO offering:
“This IPO offers advantages for all parties involved. The proceeds will accelerate Volkswagen AG’s transformation, its shareholders will receive a special dividend payment and Porsche AG will gain more entrepreneurial freedom. Naturally, all shareholders of Porsche SE will also profit from this transaction.”
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