Porsche as a role model
All VW brands are to go public “virtually”.
10/04/2022 2:49 p.m
The huge Volkswagen Group with its ten vehicle brands is comparatively unattractive for investors. However, the IPO of Porsche shows the potential that lies dormant in the subsidiaries. The VW boss now wants to raise that at least “virtually”.
Even if the new Porsche share fell a little below its issue price a few days after its trading debut: For the parent company VW and the head of both companies, which are now publicly traded, Oliver Blume, the partial IPO of the sports car brand was a huge success. At almost 80 billion dollars, the Stuttgart subsidiary is now valued by investors almost as highly as the parent company itself, the world’s largest carmaker with its ten car, truck and motorcycle brands plus a number of group units and international holdings.
Volkswagen received around 9.4 billion euros with the sale of 12.5 percent of Porsche shares. A success that Blume would like to repeat. In the “Handelsblatt” the CEO announced that all brands should prepare “virtual equity stories”. In plain language: You should first go through an IPO. In some cases, this could actually happen later. In any case, however, the group’s subsidiaries should thus better highlight their potential to investors. Above all, Blume hopes that the parts of the group will act less like subsidiaries and more like listed companies under the “virtual” pressure of the capital market, sharpen their respective profiles and improve “performance”. In order to make the practice IPOs as realistic as possible, teams of consultants from banks should stand by the car managers.
As a conglomerate, the Volkswagen Group has so far led a shadowy existence on the stock exchange. The competitor Toyota, measured in terms of sales, is worth more than twice as much from the investors’ point of view. The much smaller electric pioneer Tesla even many times over. Investors do not trust the complex Wolfsburg construct to achieve comparable profit growth. On the one hand, because with the Porsche and Pïech families, the state of Lower Saxony and the trade unions, an unusually large number of stakeholders influence company decisions. But even the very different vehicle brands such as Ducati, Seat and MAN, with their different markets and interests, sometimes tend to get in each other’s way rather than achieve synergy effects.
Expert: “Hardly any reasons” against further IPOs
With its IPO, Porsche shows, according to Blume, how the sports car manufacturer can gain more independence on the one hand and still continue to benefit from the association with the entire group. Porsche isn’t the first VW subsidiary to go public, and it probably won’t be the last. Volkswagen had already sold its Traton truck division on the stock exchange a good two years ago. “There are hardly any reasons why more brands could not be listed on the stock exchange,” quoted the “Handelsblatt” as industry expert Arndt Ellinghorst from the economic data company Quantco.
With such IPOs, Volkswagen, as a company that is only meagerly valued by the investors themselves, could raise fresh capital that is needed for the expensive conversion into a long-term sustainable provider of electromobility. Together with partners, around 20 billion euros are to be invested in the planned development of battery cell production with six new plants alone. There is currently “no decision, but potential” for an IPO for the responsible VW unit Powerco, said Blume.