It could even be completed this month.
More than a year ago, we heard that Porsche might be planning an initial public offering (IPO). This would generate a load of cash while allowing the Porsche and Piech families to retain control of the valuable automaker, but more on that later.
At the end of the year, the rumors resurfaced, but in March of this year, Porsche announced that the war in Ukraine was concerning enough that it would potentially need to delay the listing. There's been a lot of back and forth since then, and Porsche CEO Oliver Blume is now in charge of Volkswagen too, but it's pretty clear that the automaker has plenty of willing investors and could be worth around $85 billion.
We could soon find out how accurate that estimate is, as Porsche has today announced a so-called intention to float for an IPO late this month or early in October, with the listing to be completed by the end of the year.
"We very much welcome the decision of the Volkswagen Supervisory Board in favor of an IPO of Porsche AG," said Blume. "This is a historic moment for Porsche. We believe an IPO would open up a new chapter for us with increased independence as one of the world's most successful sports car manufacturers. It would strengthen our ability to further execute our strategy."
Porsche says that the share capital of the company was divided into 50% Preferred Shares and 50% Ordinary Shares. The IPO will offer up to 25% of non-voting Preferred Shares to be listed on the Frankfurt Stock Exchange. The public offerings will take place in Germany, Austria, France, Italy, Spain, and Switzerland, but there will also be private placements for institutional investors. Porsche aims for a dividend payout ratio of 50% of the Porsche Group's International Financial Reporting Standards consolidated profit after tax, which shareholders would receive in the mid-term.
Existing shareholders include the German state of Lower Saxony and the UAE nation of Qatar, and current shareholders would receive 49% of the gross proceeds generated from the sale of the shares.
While this looks like great news for potential investors, various analysts think that this could be a bad time for the IPO. While it's true that Porsche has had a fantastic 2022 so far, the situation in Ukraine is not getting any better, and the resulting supply challenges are both significant and numerous. In fact, the announcement comes just as Russia stops supplying gas to Germany, putting more strain on all industries. Your next 911 may even be delayed as a result.
In addition, prominent figures like Tesla's Elon Musk have predicted an imminent global financial meltdown, which is part of why the most recent valuation estimates have been far lower than the initial predictions of around $110 billion. Granted, this is a small factor in the value of the company, but it has an impact nonetheless.
So why go ahead now, rather than once the economy is more stable and has a positive outlook? After all, Porsche is not struggling with cash flow. The answer seems slightly nefarious and has to do with the Porsche and Piech dynasties.
Reuters reports that, according to the IPO framework agreement, "Porsche SE, which owns a 31.4% equity stake in Volkswagen and 53.3% of the voting rights, would buy 25% plus one share of Porsche AG's ordinary shares [...] at a 7.5% premium to the placement price of the preferred shares." Porsche SE is the holding company in charge of Porsche AG and is controlled by the Porsche and Piech families. Thus, the decision to push the IPO ahead despite a challenging economic forecast for the market as a whole suggests that the families are only focused on taking more control of Porsche. These are the same people that unceremoniously ousted Herbert Diess from VW.
At this stage, the IPO is not yet a done deal. Volkswagen has essentially issued a statement of intent, but if the economy crumbles or supply issues worsen (or some other factor has an impact), the IPO may still be delayed. We'll bring you more as we get it.