The German stock market will get a momentary reprieve from the relentless focus on gas supplies when Porsche goes public on Thursday.
The IPO is expected to be the second largest in German history, and possibly third-largest in Europe.
Porsche is one of the few Volkswagen VOW 3 holdings that are mostly held by Porsche Automobil Holding PAH 3, the investment vehicle of the founding Porsche and Piesch family. Porsche has been split into 911 million shares, a nod to its most famous product.
Porsche SE, a holding company, will buy 25% plus one share of Porsche AG, at whatever the IPO price is, plus another 7.5%. Another 25% of Porsche AG will be sold into the market by VW but will not carry voting rights, with the ticker symbol P 911.
VW has indicated a price range of €76.50 to €82.50 per preference share, to raise between €8.7 billion and €9.4 billion. The sale of Porsche SE will raise another €9.4 billion to €10.1 billion.
VW is planning to distribute 49% of the proceeds in a special dividend. The rest will help VW s push into electric vehicles as well as software development.
Qatar's investment authority, Norway's sovereign-wealth fund and T. Rowe Price Group Inc. TROWGroup Inc. TROW are among the investors who have committed to the Porsche IPO.
Porsche made €4 billion last year, with revenue of €33.14 billion. Its operating profit, excluding the diesel penalty of 2019, reached 16% last year, and its earnings before interest, taxes, depreciation and amortization Ebitda margin was 24.5%. A year ago, Ferrari RACE, RACE, had a lead of 35.7%.
Possible shareholders in Porsche are wondering if the company can make a successful transition to become fully EV while preserving or even expanding margins. Peter Ganry, head of equity strategy at Saxo Bank, said when you compare Porsche to Ferrari, there is room for improvement and a potential upside if Porsche can improve its operations and expand its already strong brand.
Over half of the sales of vehicles have been in the sport-utility vehicle segment, under the Cayenne and Macan families, and are known as a sports maker. In 2024 it plans to deliver a battery electric vehicle version of the Macan, as it aims to provide 50% of vehicle deliveries in 2025 as electrified vehicles and 80% by 2030 as BEVs.
Porsche is dependent on the fortunes of the world's wealthy. Demand for the Group's products may be reduced in economic downturns as customers shift from buying luxury sports vehicles to buying vehicles in less expensive segments, according to the IPO notes.
According to the IPO prospectus, the 911 sports car entry model costs €113,500 in Germany. The cheapest Porsche — the 718 — costs a cool €59,200.
Porsche is not immune to the struggles of third-party suppliers, according to a statement by the company. It is exposed to the energy difficulties of its home country with its need for both natural gas and renewables such as biomethane. Most of its vehicles are made in Germany and Slovakia.
Shipping to China has become more expensive because of the Russian-Ukraine war, which has made it impossible to ship by rail. Porsche stopped exporting to Russia, and the war has resulted in increased costs on raw materials as well as parts made in Ukraine, such as wire harnesses and steel products.
Scores of other banks are also participating in the IPO, including Bank of America BAC, Citigroup C, Goldman Sachs GS and J.P. Morgan JPM.