This is one of the largest stock market transactions in Frankfurt. The German luxury car manufacturer Porsche made its debut on the stock market on Thursday at a share price that values it at 75 billion euros. The action was placed by the parent company, the giant with the twelve brands Volkswagen, at an introductory price of 82.50 euros, the company said Wednesday evening in a press release. This price is at the top of the previously announced range between 76.50 and 82.50 euros per share. The first quotation of the title is expected Thursday around 7:15 GMT.
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Strong demand for the stock “shows investors’ confidence in Porsche’s future,” Volkswagen chief financial officer Arno Antlitz said in a statement.
To seduce the Stock Exchange, the manufacturer of the legendary 911 has bet on its insolent financial health like the entire luxury automobile sector and on an almost century-old history which has made it a benchmark for sports cars “made in Germany”.
A gloomy stock market context
The issue volume of 9.4 billion euros makes it the second largest IPO in Germany after that of Deutsche Telekom in 1996 and the largest in Europe since 2011 with the Swiss giant of raw materials Glencore.
If Volkswagen has ultimately placed only 12.5% of the capital of its nugget on the stock market, the second largest automotive group in the world intends to derive billions of cash to inject into its costly transition to the electric and autonomous car.
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Porsche displays on the starting line a higher capitalization than other German giants such as BMW (47 billion euros) and Mercedes-Benz (58 billion euros) which sell far more cars than the Zuffenhausen firm, nearly from Stuttgart (south).
The operation is all the more exceptional since, in recent months, IPOs have been rare in Europe in an environment marked by inflation, rising interest rates and the war in Ukraine.
The Dax index on the Frankfurt Stock Exchange has lost nearly a quarter of its value since the start of the year, with the automotive sector, struggling in terms of sales, being particularly neglected. “It’s not the best time for an IPO,” said German automotive expert Ferdinand Dudenhoeffer, who however sees it as a test of “the international value given to German engineering”.
Volkswagen has secured the support of key shareholders in Porsche such as the public investment funds of Qatar and Abu Dhabi, the Norwegian sovereign wealth fund and the American asset manager T. Rowe Price. Together, they will hold nearly 3.6 billion euros in preferred shares, with Qatar accounting for the largest share.
The company’s outlook has a lot to do with it: Porsche has raised its operating margin target to a range between 17 and 18% and turnover should grow by 11 to 14% compared to 2021. Porche is evolving within the a luxury car sector that is expected to “grow 13% per year in the long term”, according to analysts at Berenberg.