Back to the future: Porsche’s IPO gives a sense of déjà vu
As with many of Volkswagen’s most important announcements in the past decade, the German group’s management board had no control over the timing of a statement that finally confirmed it planned to list the company’s crown jewel, Porsche.
Instead, the drip-feed of rumours from the manufacturer’s many “stakeholders” — which include a secretive family shareholder, powerful unions, the state of Lower Saxony and 12 different car brands — forced VW to issue a statement under stock market rules just as Russia looked poised to invade Ukraine.
Neither a botched bulletin, however, nor the prospect of war, could dampen the case for liberating Porsche, which delivers just 300,000 vehicles out of the 9mn sold by VW each year, yet accounts for roughly a quarter of profits.
Few more valuable assets have been hidden from investors’ direct view. Following the mantra of its former boss Ferry Porsche — who said the company “can and may build anything, as long as the product is better than any competitors” — Porsche is alone among legacy manufacturers in maintaining high margins in the electric age.
In contrast to VW, which has flooded the market with underperforming electric vehicles, Porsche has focused on excellence. The brand most famous for the purr of its combustion engines managed to sell more silent Taycan models than storied 911s last year, delivering 41,000 of the cars, much to the surprise of Porsche’s own executives.
Yet the leaked details of the planned IPO, which still needs to be approved by VW’s board, is already leading to concerns that VW’s management in Wolfsburg will somehow bungle this move, in a manner not too dissimilar to the ill-fated partial float of its Traton trucks arm.
Firstly, there’s concern that VW, which mints €15bn in free cash flow a year and has repeatedly told the market that it has enough money to fund its current electric ambitions, could whittle away the proceeds on expensive and unnecessary projects to placate unions and secure jobs.
Secondly, Porsche’s stock will be split equally into ordinary shares and non-voting preference shares, after which 25 per cent will be floated at an expected valuation of between €80bn-€90bn.
The investment vehicle of the Porsche-Piech family — Volkswagen’s controlling shareholder that’s seeking to regain ownership of an asset it sees as akin to Ferrari and LVMH — could buy half of the ordinary shares on offer.
That leaves just 12.5 per cent in free float, in a structure eerily similar to the two-tier system that has long stymied VW and plagued the formerly independent Porsche.
It may not make the time-travelling DeLorean, but Porsche is in danger of going back to the future.