Volkswagen seeks to raise $9.4 billion in Porsche IPO

A Porsche 718 Spyder luxury automobile, right, in the Porsche SE showroom in Dortmund, Germany, on Wednesday, Sept. 7 2022. Volkswagen AG is pushing ahead with its plan to list a minority stake in the Porsche sports-car maker despite gyrating markets, paving the way for what could be one of Europe's biggest initial public offerings.

Volkswagen AG is looking to raise as much as 9.4 billion euros ($9.41 billion) from the initial public offering of its iconic sports-car maker Porsche AG in what could be Europe’s largest listing in more than a decade.

The German carmaker said late Sunday it is seeking a valuation of 70 billion to 75 billion euros for the listing, below an earlier top-end goal of as much as 85 billion euros, with the deal going ahead at a time of deep market upheaval. European markets have been largely shut to IPOs for most of the year, with companies shying away from seeking new listings because of the region’s energy crisis, rising interest rates and record inflation.

Amid the stock market slump, the plan to list is getting a boost from firm commitments of key cornerstone investors. Qatar Investment Authority, Norway’s sovereign wealth fund, T. Rowe Price and ADQ are set to subscribe to preferred shares of as much as 3.7 billion euros, the manufacturer said. Porsche isn’t alone in scaling back valuation targets, with Intel Corp. lowering expectations for its Mobileye IPO.

“We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors,” VW’s Chief Financial Officer Arno Antlitz said.

The offer period will start on Sept. 20 with a planned trading start for on Sept. 29.

Aside from offering investors a slice of one of the most recognizable names in carmaking, the IPO will hand back significant decision-making power to the Porsche-Piech family, who lost control of the sports-car maker more than a decade ago after a protracted takeover battle with VW. To account for the interests of the billionaire family, who hold 53% of VW’s voting shares via the separately listed Porsche Automobil Holding SE, the Porsche IPO is complex and has triggered governance concerns that mirror those about VW’s convoluted structure.

Investors will be able to subscribe to 25% of Porsche preferred shares, which carry no voting rights. The family will buy 25% plus one of Porsche’s common shares with voting rights, meaning they will receive a minority blocking stake and sway on future key decisions. The family has agreed to pay a 7.5% premium on top of the price range for the preferred shares and plan to fund the acquisition with a mix of debt capital of as much as 7.9 billion euros and a special dividend payed out by VW.

Proceeds from the deal will help VW with financing its electric-vehicle transition and investments in software, the carmaker says.

While interest for the IPO has been high, some investors have said the appointment of Oliver Blume, Porsche’s chief executive, to the helm of VW and the plan for him to stay on in a dual role raises questions about Porsche’s future independence.