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With Volkswagen willing to ramp up its electric vehicle and battery efforts, Porsche IPO would help it raise money to invest in its transformation.
Volkswagen Group (ETR: VOW3) is launching an initial public offering (IPO) of its subsidiary Porsche AG, an automobile manufacturer that specializes in high-performance sports cars. With the price range for preferred shares set at 76.50 to 82.50 euros, Porsche is expecting to reach a $73 billion valuation and become the world’s fourth-most valuable car producer. Notably, its parent company Volkswagen will float 12.5% of Porsche shares, raising more than $9 billion for the company.
According to the prospectus for Porsche IPO, the offer period lasted from 20 September 2022 to 28 September. The share capital of the company has been divided into 911 million shares, 50% of which are preferred shares and 50% of which are ordinary bearer shares. The preferred shares will be listed today on the Regulated Market of the Frankfurt Stock Exchange. Meanwhile, ordinary shares will not be listed and will remain in the hands of Volkswagen. In other words, the latter will remain the controlling shareholder after Porsche AG.
According to Porsche CFO Arno Antlitz, the initiative is a big step in the company’s development, as the proceeds would give it “more flexibility to further accelerate the transformation.”
The Joint Global Coordinators and Joint Bookrunners for the IPO are such companies as BofA Securities, Citigroup, Goldman Sachs, and JPMorgan. Besides, Commerzbank, Crédit Agricole, LBBW, and Mizuho have been appointed as co-lead managers. Mediobanca is acting as financial advisor to Porsche AG.
Volkswagen vs Tesla
With Volkswagen willing to ramp up its electric vehicle and battery efforts, Porsche IPO would help it raise money to invest in its transformation. The company has already launched an all-electric pick-up and rugged SUV in the US, and now it wants to expand EV production and pass Tesla Inc (NYSE: TSLA) in electric car sales by 2025.
With new Gigafactories in Berlin and Austin ramping up, Tesla has no intention of slowing down. However, with Volkswagen’s intention and ability to invest heavily into EV battery technology, there are chances of the German carmaker surpassing Tesla. Volkswagen has ten different brands under its control that range in price and prestige. This gives Volkswagen Group an advantage to sell a wide variety of electric models in markets around the world like the Audi e-Tron model, the Volkswagen ID.3 compact car and ID.4 SUV, and the high-performance Porsche Taycan.
According to a report from Bloomberg Intelligence, Chinese and European markets will be especially important in deciding on leadership in electric vehicles over the next few years. Regulations in both countries heavily favour electric vehicles. And while Tesla is leading the Chinese market, Volkswagen has already taken over Tesla in EV sales in Europe.