Volkswagen AG, with the backing of its top shareholder, is preparing an initial public offering (IPO) of Porsche, paving the way for a blockbuster listing on the stock market for the luxury car brand, which investors hope will finally unlock its true value.
Porsche undoubtedly is Volkswagen's most profitable asset. The latter hopes that the planned listing will help boost the parent company's valuation and fund its electrification plans.
Analysts believe the Porsche listing could be one of the largest stock market debuts globally, with estimates placing the car brand's value in an IPO up to $102 billion (90 billion euros). That is not far behind Volkswagen's current market value of around 116 billion euros.
The news sent the stock market into a frenzy, with Volkswagen's preferred shares surging by as much as 10 percent after Tuesday's announcement of a possible Porsche IPO. The tentative plan that Volkswagen and Porsche Automobil Holding SE are working on would reverse a tumultuous Porsche takeover that happened more than a decade ago.
To refresh everyone's memory, Porsche tried to take over Volkswagen in 2009, but the move failed. Volkswagen acquired the luxury brand soon after, with the Porsche and Piech families becoming the former's most influential investors via their holding company Porsche SE. They hold 31.4 percent of the shares in Volkswagen and 53 percent of the automaker's voting rights.
Two people with knowledge of the planned IPO spoke to Reuters, telling the news organization that Volkswagen could issue an equal number of ordinary and preference shares in the potential IPO for Porsche. Volkswagen also may pay a special dividend to its owners to bolster support for the plan.
Ordinary shares bestow voting rights, and Porsche SE said it could buy such shares in any listing of Porsche AG. The sources also said that Volkswagen might seek to list 25 percent of Porsche AG if the planned IPO is given the green light.
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Sources previously said that the Piech and Porsche families might opt to lessen their stake in Volkswagen to buy into the planned IPO of Porsche AG. Such a decision would result in the families loosening their grip on the German group. However, they would have direct ownership of the legendary sports car brand that was founded in 1931 by their ancestor Ferdinand Porsche.
Porsche SE and Volkswagen declined to comment regarding details of a potential IPO, but the automaker did say that a final decision on the listing had not been taken thus far and that any deal must first be approved by management and supervisory boards.
According to one of the sources, Volkswagen CEO Herbert Diess presented a basic outline of the Porsche IPO plans earlier this week to representatives of the supervisory board following discussions on the listing last weekend.
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