It's finally happening after months of speculation.
After months of rumors and other unconfirmed reports, the Volkswagen Group has officially announced it is holding advanced discussions with Porsche Automobil Holding SE, the carmaker's largest shareholder, about an IPO of the legendary sports car company. In an official statement, the two sides revealed a framework agreement has already been negotiated. Any final agreement, however, must be approved by VW's management and supervisory boards. A deal could be imminent.
"Whether a Framework Agreement is concluded and its content as well as the question if an IPO of Dr. Ing. h.c. F. Porsche is being further assessed, is currently open and depends on the approval of both parties' boards," the press release stated. The speculation about a deal almost immediately sent VW shares soaring by as much as a 10 percent gain.
This has the potential to be a record-breaking IPO for any automaker, perhaps even surpassing Ferrari's very impressive IPO back in 2015. Splitting off Porsche could result in an IPO worth as much as anywhere from $50 billion to $100 billion. The Porsche and Piech families, who control the major VW shareholding group Porsche Automobil Holding SE, are also reportedly seriously considering selling off a share of their VW stake to purchase a significant number of Porsche shares.
Only a year or so ago, VW Group CEO Herbert Diess denied speculation about a Porsche IPO but things have changed since. VW needs to raise fresh capital as part of its quest to take on EV heavyweight Tesla and other major automakers who are also rapidly embracing EV-only futures.
It's not just about having the funds to build and develop new vehicles, but also vital new technologies such as connectivity software, batteries, and major internal infrastructure projects like new factories and heavily renovating existing ones. As for Porsche, acting as its own separate entity has the potential to unlock value and, at the same time, to gain independence to keep doing what it does best. Its only EV is the Taycan but that won't be the case for much longer.
Next year, the all-electric Macan will debut, and work is already well underway on the next generation 718 Boxster and Cayman, which will also be purely battery-powered.