December 7, 2022

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Porsche rises after its historic listing of $ 72 billion

Porsche rises after its historic listing of $ 72 billion
  • Stocks quoted above the specified range
  • The largest list in Germany since 1996
  • Stocks rise 3% despite weak stock markets

FRANKFURT (Reuters) – Shares in Porsche AG got off to a strong start on Thursday after Volkswagen (VOWG_p.DE) He defied volatile markets to list the 75 billion euro ($72 billion) sports car brand in the second biggest German debut ever.

Volkswagen has priced Porsche shares at the upper end of the indicated range and has raised €19.5 billion from the flotation to fund the group’s electrification drive. Porsche AG shares were trading up 3 percent from the issue price of 82.50 euros at 1035 GMT.

This brought Porsche’s value to €77.4 billion, which is close to the market value of Volkswagen as a whole, which is worth around €80.1 billion, putting it ahead of rivals such as Ferrari. (RACE.MI). It is the largest list in Germany since Deutsche Telekom (DTEGn.DE) in 1996.

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In an interview with Reuters, Oliver Blume shrugged off concerns about his dual role as chief executive of both Porsche and Volkswagen, saying the decision was made “with great awareness”.

Porsche AG’s strong start came despite broad weakness in stock markets in the wake of hot German inflation data. Shares in Volkswagen and owns a Porsche SE (PSHG_p.DE)which owns a blocking minority in Porsche AG, is down 4.6% and 8%, respectively, as investors turned.

“This is not exactly the dream environment for an IPO today,” said Thomas Altmann, wealth manager at QC Partners.

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The Porsche float comes as European listings face their worst year since 2009, as investors fear a possible global recession amid high inflation, high interest rates and the war in Ukraine.

Companies in the region have raised $44 billion in capital market deals through September 27, according to Refinitiv data, with just $4.5 billion from initial public offerings.

“There is a lot to like about the company, with its aggressive electrification plans, strong anticipated cash flow generation and premium market positioning,” Chi Chan, European equity portfolio manager at Federated Hermes Limited, told Reuters.

“However, it comes to the market at a time of unprecedented turmoil and consumer confidence is declining.”

Porsche vs competitors

Porsche CEO Oliver Blume, whose dual role as new head of Volkswagen drew criticism from some investors, hailed the listing as a “historic moment” as he hugged his colleagues and rang a bell in a crowded Frankfurt trading floor.

Volkswagen said market volatility was precisely why fund managers badly needed a stable and profitable business like Porsche AG to invest in.

“Porsche has been and remains the pearl of the Volkswagen Group,” said Chris Oliver Schickentans, chief investment officer at Capital, fund manager. “The IPO made very transparent the value the market brings to Porsche.”

Faced with tens of billions of costs for a radical shift toward electric mobility and software, Volkswagen executives have long considered listing Porsche, a move executives hope will raise much-needed funds and raise VW’s own value.

The Porsche and Bisch families, whose holding company Porsche SE controls Volkswagen, will in turn consolidate their control of Porsche AG because they will own 25%, plus one ordinary stake – carrying voting rights – in the sports car brand.

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As many as 113,875,000 Porsche preferred shares, which carry no voting rights, were sold in the initial public offering.

Bank of America, Citigroup, Goldman Sachs and JPMorgan acted as joint global coordinators and joint bookrunners for the transaction, while Mediobanca acted as financial advisor to Porsche.

(1 dollar = 1.0339 euros)

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Additional reporting by Victoria Waldersi, Emma Victoria Farr, Hakan Ersin, Christoph Stitz, Sinead Cruz and Pamela Barbaglia; Written by Victoria Waldersi and Mathias Williams; Editing by Jane Merriman and Mark Potter

Our criteria: Thomson Reuters Trust Principles.