Volkswagen announced on Sunday that it would be seeking a valuation of between 70 and 75 billion dollars for Porsche AG in its initial public offering, making this potentially the third largest IPO in European history. Some experts had hinted at an expectation of valuation around $85 billion, meaning this is actually going to be a bit shy of initial indications, but still substantially higher than BMW (49 billion euro) or Mercedes (61 billion euro) valuations. The fact of the matter is that in light of Tesla’s $968B market cap, company values are largely based on *vibes* in today’s market. There’s very little bearing in a company’s value on paper and that of its assets and products.
Porsche has at least two decades of pretty substantial year-on-year growth to show potential investors, as well as its insanely high profit-per-vehicle-sold ratio. These numbers should assuage any fears of an investment in Porsche going bust. With big investments in electric propulsion, Porsche is perhaps better slated for its future in the industry than any other luxury automaker, and with big marketing efforts drawing Porsche into Formula E, IMSA, FIA WEC, and various other motorsports programs, ownership in Porsche is virtually guaranteed to be high visibility for the foreseeable future.
In the structure of the IPO, Porsche SE (a holding company largely owned by the Porsche and Piech families) will retain a blocking minority of 25 percent of the company, plus a single voting ordinary share. For the privilege of buying such a large chunk of the company, Porsche SE will pay a 7.5 percent premium for its shares to Volkswagen AG, but it will be treated as already having owned those shares before the public offering, meaning those shares are accounted for and off the table. Because the IPO is actually only listing 25% of Porsche’s preferred shares, Porsche SE will still have control over the company’s future. Traditional stock market investors will own just 12.5 percent of Porsche AG, and won’t be able to make much difference in the direction of the company, as their collective votes will be just a small portion.
Interest in the IPO has come from the Middle East, naturally, in the form of a huge 4.99% purchase from the Qatar Investment Authority, and a 350 million dollar buy from Abu Dhabi ADQ. Norway’s sovereign wealth fund is investing 750 million euro, which is being matched by T. Rowe Price.
According to the prospectus, CEO Oliver Blume will maintain CEO status at both Porsche and Volkswagen, splitting his work capacity 50/50 between the two companies. Volkswagen will pay 100% of his salary through the end of 2022, and will be split 60/40 between VW and Porsche after that. The prospectus also indicates Porsche AG will pay a first dividend of 911 million euros plus an extra dividend of 0.01 euros per preferred share this year, obviously in reference to the brand’s most famous model.