By Anthony Henson, August 30, 2022
Volkswagen is preparing to sell Porsche by listing the fabled sports car company on the stock market. To investors and traders, the Porsche IPO is being billed as one of Europe’s biggest listings ever. Volkswagen is not listing the entirety of Porsche shares. The shares will be split into two halves consisting of ordinary shares and preference shares. Very simply put, Volkswagen will list 12 percent of Porsche shares, and the remainder will be kept by Volkswagen and Porsche. Volkswagen will remain the largest shareholder by a significant margin.
Investor interest has already bloated the pre-listing value from $60BN to $85BN. Once the shares go public, expected either in September or October, the investor buying frenzy should add yet more billions. Porsche shares are going public to anyone, but the average person on an average wage will need deep pockets and even deeper contacts to acquire the shares.
In reality, only institutional investors will have the financial clout to buy Porsche shares, investors such as Qatar Investment Authority, Price Cooper and T Rowe. These are just a few of the global investment funds with billions at their disposal. And then there are private billionaires, totaling 2,700. The USA and China have the most individually wealthy billionaires and they will be the key players in scooping up Porsche shares.
Interestingly many U.S. and European institutional asset managers, who enthusiastically invest in German IPOs, have remained on the fence. Corporate governance is said to be one reason, or perhaps they may not want to reveal their cards too early. The ongoing proxy war in Ukraine between the USA, NATO and Russia and the resulting inflation caused by soaring energy costs is another possible reason.
IPOs are always over-valued, Aston Martin is one such example, so what goes up will come down. The Porsche IPO value of $85BN will likely go up and not come down for many years unless Porsche suffers from a catastrophic sales decline.