Porsche’s IPO of 911 million shares, referring to its most popular model

Porsche’s IPO of 911 million shares, referring to its most popular model

Written by Jan Schwartz, Emma Victoria Farr, and Lucy Raytanu

HAMBURG/FRANKFURT/LONDON (Reuters) – Volkswagen’s board of directors is set to meet on Sunday to advance the initial public offering of its Porsche brand, which will feature 911 million shares in reference to its most popular model, two sources close to the matter said. .

A third source said that details of the price range, valuation and core investors are likely to be announced after the meeting.

The 911 million shares of Porsche AG will be split into 455.5 million preferred shares and 455.5 million common shares, according to the stock offering website. Only preferred shares will be listed.

Porsche SE, Volkswagen’s largest shareholder (ETR :), has committed to buying 25% plus one of the common stock at a premium of 7.5% over preferred stock.

Several sources said that investor roadshows are scheduled to complete on Friday, allowing time for senior executives to hold discussions over the weekend before opening the book-building process early next week.

The sources said that a prospectus is expected to be published on the stock exchange on Monday, after which institutional and private investors can subscribe to Porsche shares.

Volkswagen and Porsche declined to comment.

Two sources said investor interest in the IPO remains strong, despite concerns about governance over Oliver Blum’s dual role as CEO of Volkswagen and Porsche.

One of the sources said Porsche’s valuation is likely to be between 70-80 billion euros ($70-80 billion), downplaying an analyst’s note from HSBC this week that the sports car maker was estimated at well below 44.5-56.9 billion euros. .

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That source added that nothing is certain while the operation is in progress. “It’s a point that could go either way,” the source said, noting the sharp reaction in markets this week to a slight deviation from expectations in US inflation data.

“One has to be careful. There are still risks if the market continues to slide,” the source said. This source added that given the major investors involved, Porsche is confident of reaching a valuation of 70-80 billion euros.

On the higher end of the ratings, Porsche will still rate luxury car maker Ferrari (NYSE:) lower on benchmarks, though it is higher than some other luxury automakers, according to bankers working on the deal.

A valuation of 65-85 billion euros for Porsche would correspond to an enterprise value of 8.5-11.3 times its projected earnings before interest and taxes for 2023, and a price-to-earnings (PE) ratio of 12.6-16.5, one banker involved said in the deal.

Ferrari is currently trading at PE 35 for 2023 estimates, according to Refinitiv data, but Mercedes-Benz and BMW are trading between 4.5 and 5 times on the same basis, the data shows.

Volkswagen has a market value of about 89 billion euros, according to Refinitiv data.

โ€œVolkswagen has said it hopes the IPO will crystallize value, but this is huge value that will be created overnight,โ€ said Joshua Warner, financial markets analyst at City Index.

Referring to the HSBC memo, Warner said the massive valuation could pose a problem as Porsche needs to avoid “stifling its start in public life by setting very high standards – especially in current market conditions”.

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