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Porsche spinoff: IPO details as VW floats its luxury division

By Jenny McCall


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VOW3
Volkswagen
137.95 USD
-2.1 -1.500%
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Porsche AG Vz
106.03 USD
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A image of a Porsche vehicle
Now the listing has taken place, the Porsche-Piech family will again have some control of the luxury car group - Photo: Shutterstock

Now that Volkswagen (VOW3) has officially demerged from its luxury car divsion, Porsche in an initial public offering (IPO) on Thursday, here are the details in full on the current Porsche (P911) share price and other information that investors maybe keen to know. 

Porsche is trading under stock ticker P911 on the Frankfurt stock exchange.

VW’s share price was up 5% after it announced the spin-off. But this year, VW’s stock price has been down 32%.

The luxury carmaker Porsche (P911) shares are trading at €82.5 (£79.32) per share, which is the top end of the initial range given at the start of the month. 

VOW3 also announced that it intends to use at least 49% of the proceeds to pay a one-off special dividend to shareholders, the remaining proceeds will help fund the cost of the groups shift towards electric vehicles and battery technology. 

According to Refinitiv data, the Porsche (P911) IPO has become Europe's largest stock market float. 

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Volkswagen (VOW3) share price chart

VW forced to announce Porsche IPO

Its labyrinth and complex ownership structure has caused investors and experts to grow concerned about the flotation. For months the rumour mill was in operation as to whether VW will allow for a Porsche (P911) IPO. This week, the German car manufacturer officially spun-off the luxury car maker.

Analysts at Zacks Research wrote in a note: “In what could be one of Europe’s largest initial public offerings (IPO), the IPO marks a further step in the occasionally fraught relationship the two auto leaders share.”

It was  also thought that geopolitical tensions, rising interest rates and inflation could scupper the plans, but not quite.

It also seems that  now the listing has taken place, the Porsche-Piech family will once again have some control of the luxury car group. Just after the financial crisis began, in 2009, VW  (VOW3) purchased a 49.9% stake in Porsche AG. Then in 2012 VW bought the remaining part. But this has now changed. 

Porsche (P911) share price chart

What can shareholders expect from the IPO?

As VW (VOW3) demerged from the luxury group, Porsche (P911) stock will be split into 50% ordinary shares and 50% non voting preferred stock. Porsche (P911) has been listed on the Frankfurt Stock Exchange and will offer 25% of preferred stock to private investors through the IPO.

How much is Porsche (P911) valued at?

Porsche (P911) shares are trading at €82.5 (£79.32) per share, which is the top end of the initial range given at the start of the month. 

How much stock will the Porsche (P911) family receive?

The heirs to the Porsche empire, who also have a majority stake in VW, will purchase 25% plus one shares of Porsche AG (P911), or voting stock, via their listed family investment fund Porsche SE. This will mean that billionaire Porsche-Piech family will regain its direct influence over the Porsche enterprise, this comes almost 13 years after it was made to sell the sports car business to VW (VOW3).

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Through the IPO, the domination agreement, that transfers profit and losses to the parent company at the end of the year, will cease.

“The IPO is crucial as it comes at a time when European stocks are staggering amid very high inflation rates and a spiralling energy crisis in the continent due to the Russia-Ukraine standoff. At such crossroads, the announced IPO is believed to test investors’ confidence,” Zacks analysts said.

Who else will have a stake in Porsche (P911)?

It was also announced that the Qatar Investment Authority plans to acquire a 4.99% stake in Porsche preferred stock.

Is Porsche (P911)  a good brand to invest in?

“Porsche’s status and reputation as a luxury brand enable it to bump up prices, making it a cash-spinner for the Volkswagen Group. Porsche’s operating profit jumped 22% in the first half of this year while Volkswagen (VOW3) registered an 8% fall,” a Zacks analysts wrote in a note.

“The IPO would thus be a significant step for Volkswagen (VOW3) to pump up funds to fuel its ambitious EV plans.”

Who will hold the remaining stake in Porsche?

VW (VOW3) will hold the remainder of Porsche (P911) stock. 49% of its proceeds will be distributed among its shareholders in the form of a special dividend and this is anticipated to be paid at the start of 2023.

The company also plans to offer Porsche’s preferred shares to retail investors in countries, including Germany, Austria, Switzerland, France, Spain, and Italy.

When will the IPO take place?

The deal took place on Thursday 29 Sepetmber. 

“It is undeniable that present market conditions are quite unfavourable and volatile for stock debuts,” Zacks said in a note.

There are also other concerns, as analysts at Zacks point out. The structure if the IPO is concerning for investors, as only the non-voting shares sold to the public could make it difficult for Volkswagen (VOW3) to churn out dollars for the sports car maker. There are other worries that insiders will continue to flex control over the company at the expense of private investors.

But despite these worries, thePorsche (P911) IPO went ahead as scheduled yesterday, with VW (VOW3) defying the naysayers. 

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