(Bloomberg) — Volkswagen AG is seeking to raise up to 9.4 billion euros ($9.41 billion) from the initial public offering of iconic sports car maker Porsche AG in what could be Europe’s largest stock exchange in more than a decade.
Most Read by Bloomberg
The German carmaker said late on Sunday it was seeking a valuation of 70 billion to 75 billion euros for the listing, down from an earlier target of up to 85 billion euros, with the deal coming at a time of deep market turmoil. European markets remained largely closed for most of the year, with investors shunning IPOs due to the region’s energy crisis, rising interest rates and record inflation.
Amid the stock market downturn, the listing plan is bolstered by firm commitments from key investors. Qatar Investment Authority, Norway’s sovereign wealth fund, T. Rowe Price and ADQ are to subscribe to up to 3.7 billion euros of preferred shares, the manufacturer said. Porsche isn’t alone in lowering valuation targets, with Intel Corp. to lower expectations for Mobileye’s IPO.
“We are now at home with the IPO plans for Porsche and welcome the commitment of our fundamental investors,” said VW Chief Financial Officer Arno Antlitz.
The bidding period will begin on September 20 with trading scheduled to begin on September 29.
In addition to giving investors a piece of one of the most recognizable names in the automotive industry, the IPO will hand significant decision-making power to the Porsche-Piech family, which lost control of the sports car maker more than a decade ago after protracted takeover battle with VW. To accommodate the interests of the billionaire family, which owns 53% of VW’s voting shares through separately listed Porsche Automobil Holding SE, Porsche’s IPO is complicated and has raised governance concerns that mirror those about VW composite structure.
Investors will be able to subscribe to 25% of Porsche’s non-voting preferred shares. The family will buy 25% plus one of Porsche’s common shares with voting rights, meaning they will take a blocking minority stake and influence future key decisions. The family has agreed to pay a 7.5% premium over the price range for the preference shares and plans to finance the takeover with a mix of debt capital of up to 7.9 billion euros and a special dividend paid by VW.
Proceeds from the deal will help VW fund its transition to electric vehicles and software investments, the automaker says.
While interest in the IPO was high, some investors said the appointment of Oliver Blume, Porsche’s chief executive, to the helm of VW and the plan for him to remain in a dual role raised questions about Porsche’s future independence.
(Updates with CFO comment in fourth paragraph)
Most Read by Bloomberg Businessweek
©2022 Bloomberg LP