Only major geopolitical problem will stop Porsche IPO, CFO says

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BERLIN — Porsche will only backtrack on its stock market debut in the event of severe geopolitical problems that would make the importance of a listing fade in comparison, the sports car brand’s chief financial officer said on Tuesday.

“You never know what will happen regarding geopolitical issues, but if a potential IPO would be stopped now, we are talking about severe problems,” Lutz Meschke said on a media call.

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“By then, a potential IPO would not be a real issue,” he added.

Volkswagen triggered a listing of sports car brand Porsche AG late on Monday after months of deliberation, but cautioned the move was still subject to market developments.

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Investors questioned the timing of the decision in the run-up to Monday’s meeting, pointing to the tumbling stocks of European firms – including of other luxury carmakers – amid record inflation and the instability of war.

Still, analysts on Tuesday said the listing could bump up Volkswagen’s stock by showcasing the valuation of just one of its 14 brands, while giving Porsche SE, Volkswagen’s top shareholder, the tighter grip over the carmaker it has sought for years.

“I’m sure there’s a lot of people who want to invest in a pure electric car company that’s not a start-up, or has a nosebleed valuation like Tesla… people will want to buy this,” Chi Chan, portfolio manager of European equities at Federated Hermes said of Porsche AG stock, declining to comment on whether his firm would buy in.

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“We have no doubt the planned IPO will generate value for Volkswagen, but the greatest benefit will accrue to Porsche SE,” analysts at Mirabaud wrote, predicting Porsche SE will eventually take back full control of the Porsche brand.

Investors estimate a valuation for Porsche AG anywhere between 60 billion and 85 billion euros ($60 billion to $85 billion).

Porsche SE, which controls 31.4% of Volkswagen and has 53.3% of voting rights, will take 25% plus one share of ordinary Porsche AG shares at a 7.5% premium.

That means it would need significant financing to fund its portion of the sports car brand’s shares at a higher valuation, Bernstein analyst Daniel Roeska said in a research note.

In a media call on Tuesday, Porsche and now also Volkswagen Chief Executive Oliver Blume said the listing could help revive capital markets hit by slowing global growth.

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“There is a lot of capital in the market,” Blume said. “We think the Porsche IPO could be an icebreaker.

Volkswagen and Porsche executives declined to comment on what valuation they expect, stating only they believed Porsche would be attractive to investors even in such turbulent times.

“If a company is able to succeed under these difficult market conditions, it is Porsche,” Meschke said.

Porsche is a money-maker for the Volkswagen Group, with operating profits up 22% in the first half of the year compared to an 8% fall at the mass market Volkswagen brand.

Asked how conflicts of interest for Blume – who will remain chief of both companies even after a listing – would be handled, the CEO said Porsche AG’s executive board would have the authority to make decisions “100% on its own.” ($1 = 1.0045 euros)

(Reporting by Victoria Waldersee, Sinead Cruise; additional reporting by Danilo Masoni in Milan; Editing by Emelia Sithole-Matarise, Mark Potter and Jonathan Oatis)