Porsche races higher after landmark $72bn listing

Porsche AG shares made a strong start yesterday after Volkswagen defied volatile markets to list the sports car brand at a valuation of €75bn ($72bn) in Germany’s second-biggest market debut.
Volkswagen priced Porsche AG shares at the top end of the indicated range and raised €19.5bn from the flotation to fund the group’s electrification drive.
By 1035 GMT Porsche AG stock was trading 3% up from the issue price of €82.50.
That lifted Porsche AG’s valuation to €77.4bn, close to the market capitalisation of Volkswagen as a whole, which is worth about €80.1bn, and ahead of rivals such as Ferrari.
It is Germany’s biggest listing since Deutsche Telekom in 1996.
Oliver Blume, in a Reuters interview, brushed aside concerns about his dual role as CEO of both Porsche AG and Volkswagen, saying the decision was made “very consciously”.
Porsche AG’s strong start came despite broadly weaker stock markets after red-hot German inflation data.
Shares in Volkswagen and holding company Porsche SE, which owns a blocking minority in Porsche AG, were down 4.6% and 8% respectively as investors switched across.
“This is not exactly a dream environment for an IPO today,” said QC Partners wealth manager Thomas Altmann. Porsche’s flotation comes at a time when European listings face their worst year since 2009, with investors fretting about a possible global recession against a backdrop of soaring inflation, rising interest rates and the war in Ukraine.
Porsche is a one-off icebreaker for the IPO market, which will freeze over again very soon, said one banker involved in the transaction.
Companies in the region have raised $44bn from equity capital markets deals up to September 27, Refinitiv data shows, with only $4.5bn from initial public offerings.
“There’s a lot to like about the company, with its aggressive electrification plans, expected strong cashflow generation and premium brand positioning in the market,” Chi Chan, Portfolio Manager European Equities at Federated Hermes Limited, told Reuters. “However, it is coming to market at a time of unprecedented turmoil and consumer confidence is falling.”
Despite the euphoria surrounding the Porsche IPO, it will remain tricky for further listings, said Malte Hopp, head of Equity Capital Markets (ECM) for Germany and Austria at Citi.
Porsche AG chief executive 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 was precisely why fund managers were sorely in need of a stable and profitable business like Porsche AG in which to invest.
“Porsche was and is the pearl in the Volkswagen Group,” said Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell. “The IPO has now made it very, very transparent what value the market brings to Porsche.”
Faced with costs in the tens of billions for software and a radical shift towards electric mobility, Volkswagen executives had long considered listing Porsche, a move executives hoped would raise much-needed funds and lift Volkswagen’s own value.