Today, German sports car manufacturer Porsche’s shares began trading in Frankfurt, marking the second-largest listing in Germany’s history.
Despite market volatility, Porsche AG shares began at €84, higher than the final price of €82.50 established at the upper end of its range, which valued the company at approximately €75 billion (£67.3 billion).
At lunchtime, they were trading 3% higher at approximately €85, increasing Porsche’s market capitalization to approximately €77.4 billion (£69 billion).
In homage to its most well-known car, Volkswagen has offered 911 million shares.
The 12.5 percent ownership, however, is comprised of “preferred shares,” which lack voting rights, so limiting the influence of stock market investors.
The company raised €19.5 billion from the IPO, monies that will be utilized to increase the manufacture of electric vehicles and also distributed to shareholders as dividends.
The identically called Porsche SE, Volkswagen’s largest shareholder, which is owned by the Porsche-Piech family, purchased 25% plus one of the ‘ordinary’ voting shares.
Consequently, the Porsche-Piech family regains control of Porsche as a result of the Initial Public Offering.
Volkswagen and Porsche SE shares declined by 5% and 8%, respectively, as investors shifted their focus.
The massive IPO, Germany’s largest since Deutsche Telekom in 1996, occurs during a period of turmoil characterized by soaring inflation, rising interest rates, and an energy crisis.
As a result of uncertainty, investors are hesitant to invest in enterprises entering the market.
Oliver Blume, CEO of both Volkswagen and Porsche, referred to this as a “historic occasion.”
“Today, Porsche’s biggest wish comes true,” he continued. Our greater degree of autonomy places us in an excellent position to achieve our lofty objectives in the future years.
Klaus Schinkel, managing director and head of Germany for Edison Group, referred to the successful IPO as a “milestone” for European equity markets, but he does not anticipate that it will pave the way for additional listings.
While it is an encouraging indicator that firms may go public despite the current political and economic uncertainty, the Porsche IPO stands out due to its vast size, powerful brand, and significant shareholders.
The fact that issuers that went public in the past 12 to 18 months are beginning to demonstrate real value after experiencing poor share price performance after their listings will be a headwind for IPOs, even after volatility levels have decreased.
We believe that going forward, balance sheet soundness and cash flow clarity will be of paramount importance to investors.
The IPO, according to Vendigital management consultant Dom Tribe, might enable Porsche to compete with Tesla.
‘Some experts have questioned VW’s timing (due to the energy supply issue in Europe and its influence on the stock market), but with Tesla facing manufacturing challenges in China due to its zero-Covid policy, the choice to accelerate its EV changeover could be a smart strategic move,’ he said.
Individual investors are anticipated to be more enthusiastic about the IPO than typical due to the allure of the Porsche brand, its great profitability, and its devoted fan base.
