Volkswagen Goes Ahead With Porsche IPO, Defying Odds

Volkswagen AG VWAGY shared plans to list a minority stake in the Porsche sports-car maker in 2022 amid inflation and the Russia-Europe energy standoff, Reuters reports.

VW weighed an initial public offering between September and October, making way for one of Europe's leading IPO.

Investors expect a valuation between €60 billion and €85 billion ($60 billion to $85 billion), the Wall Street Journal reports, marking a sharp contrast to the falling valuations of other luxury carmakers like Aston Martin and Ferrari.

VW split Porsche's stock into 50% ordinary shares and 50% nonvoting preferred stock.

VW looks to list Porsche on the Frankfurt Stock Exchange and offer 25% of Porsche's preferred stock to private investors.

The Porsche family heirs, who own a majority stake in VW, will purchase 25% plus one share or voting stock through their listed family investment fund, Porsche Automobile Holding SE POAHF.

Porsche SE has agreed to purchase the shares at the IPO price plus a 7.5% premium bagging effective control over major strategic decisions on the board and in shareholder meetings.

The Qatar Investment Authority looks to acquire 4.99% of Porsche's preferred stock, becoming a cornerstone investor.

VW, which will continue to hold the remainder of Porsche's stock, will distribute 49% of the proceeds from the IPO and the private placement to VW shareholders in the form of a special dividend. VW would likely pay the dividend in 2023.

Investors cautioned against selling nonvoting shares to the public, making it difficult for VW to get top dollar for the sports car maker. Investors feared insiders continuing to exercise control over the company at the expense of private investors.

Investors also feared Oliver Blume's dual role as CEO of both VW and Porsche could trigger conflicts of interest. Earlier, VW CFO Arno Antlitz assured immense investor appetite and capital for an IPO. 

Volkswagen is also amid an expensive transition to electric vehicles akin to its peers. VW has been losing its share in its biggest market due to poor handling of the chip crisis and lack of digital features.

Price Action: POAHF shares traded higher by 0.55% at $69.92 in the premarket on the last check Tuesday.

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