Porsche AG shares made a strong start on Thursday after Volkswagen defied volatile markets to list the sports car brand at a valuation of €75bn (about R1.2-trillion) in Germany's second biggest market debut ever.
Volkswagen priced Porsche AG shares at the top end of the indicated range and raised €19.5bn (about R339.9bn) from the flotation to fund the group's electrification drive. Porsche AG stock was trading up 4.6% from the issue price of €82.50 (about R1,433) at 9.27am GMT.
That lifted Porsche AG's valuation to €78.5.bn (about R1.3-trillion), close to the market capitalisation of Volkswagen as a whole, which is worth about €81bn (about R1.4-trillion), and puts it ahead of rivals such as Ferrari. It is Germany's biggest listing since Deutsche Telekom in 1996.
Porsche AG's strong start came despite broadly weaker stock markets after red-hot German inflation data. Shares in Volkswagen and holding firm Porsche SE, which owns a blocking minority in Porsche AG, were down 3.8% and 8%, respectively, as investors switched across.
“This is not exactly a dream environment for an IPO today,” said Thomas Altmann, a wealth manager at QC Partners.
Porsche's flotation comes as European listings face their worst year since 2009 as investors fret about a possible global recession amid soaring inflation, rising interest rates and the war in Ukraine.
Companies in the region have raised $44bn (about R788.7bn)
from equity capital markets deals up to September 27, according to Refinitiv data, with only $4.5bn (about R80.6bn) from initial public offerings.
“There's a lot to like about the company, with its aggressive electrification plans, expected strong cash flow generation and premium brand positioning in the market,” Chi Chan, portfolio manager European equities at Federated Hermes, told Reuters.
“However, it is coming to market at a time of unprecedented turmoil and consumer confidence is falling.”
Porsche AG CEO Oliver Blume, whose dual role as the new head of Volkswagen has drawn criticism from some investors, hailed the listing as an “historic moment” as he hugged colleagues and rang the bell on a packed Frankfurt stock exchange trading floor.
Volkswagen has said the market's volatility is why fund managers are sorely in need of a stable and profitable business like Porsche AG to invest in.
“Porsche was and is the pearl in the Volkswagen Group,” Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell, said. “The IPO has now made it very transparent what value the market brings to Porsche.”
Faced with tens of billions of costs for a radical shift towards electric mobility and software, Volkswagen executives had long mulled listing Porsche, a move executives hoped would raise much-needed funds and lift Volkswagen's own value.
The Porsche and Piech families, whose holding company Porsche SE controls Volkswagen, will in turn solidify their control over Porsche AG as they will own 25%, plus one ordinary share — carrying voting rights — in the sports car brand.
Up to 113,875,000 preferred Porsche AG shares, carrying no voting rights, were sold in the initial public offering.
Bank of America, Citigroup, Goldman Sachs and JPMorgan worked as joint global co-ordinators and joint bookrunners on the deal, while Mediobanca acted as financial adviser to Porsche.
