There's Only One Thing Getting In The Way Of Porsche's IPO

Mar. 31, 2022 12:57 PM ET by Michael Butler Industry News / 16 Comments

The time isn't right so long as one thing is happening in the world...

Russia's inexplicable invasion of Ukraine has cost both nations thousands of lives, forced millions out of their homes, and has cost billions of dollars in property damage, but the greatest loss of all has been the diminished profits of international companies. That's sarcasm, in case you couldn't discern it, but companies are still placing their interests high on the priority list. The war in Ukraine has forced many companies out of the Russian market, and some fear that a continuation of the war will hamper future profits and business ventures. One such company is Porsche. This famed German auto manufacturer is worried that its intended IPO might be negatively affected by the conflict, and rumors are going around that it might delay the initial public offering.

2020-2022 Porsche 911 Carrera Front View

2020-2022 Porsche 911 Carrera Driving Front Angle

2020-2022 Porsche 911 Carrera Driving Back View

2020-2022 Porsche 911 Carrera Sideward Vision

Porsche Automobil Holding SE's initial plan was to launch its IPO in the fourth quarter of 2022, but the company is now reconsidering the plan due to the ongoing war. "We cannot rule out, if the conflict lasts a longer time, that this could have potential implications on the listing," CFO Johannes Lattwein recently explained during a press conference held in Berlin. As it currently stands, the Porsche and Piech families hold a 31.4 percent stake in Volkswagen, and Lattwein believes that an IPO will attract a healthy amount of diverse investment without rocking the structure and management of the group. "Due to the leading positioning of Porsche AG in the sport and luxury segment, this attractive investment would diversify our portfolio and our dividend inflows," Lattwein told Reuters.

2020-2022 Porsche 911 Carrera Side Mirror

If the IPO is to go ahead as planned, Volkswagen will sell 25 percent plus one ordinary share to Porsche SE and will list up to 25 percent of Porsche AG's preferred stock. Of these proceeds, 49 percent will be paid to Volkswagen shareholders in a special dividend. "Porsche SE thereby supports the plans of Volkswagen AG to expand its financial flexibility and accelerate the technological transformation of the group," Porsche SE said in a statement reporting its annual results. Porsche's fears of a suppressed appetite for high-end automotive products might be unfounded, as we've seen numerous luxury brands posting record sales figures despite the ongoing Covid pandemic, including Porsche itself, and a slow global economy. People will always buy Porsche 911s, so we wouldn't be too worried about Putin and his cronies.