FRANKFURT (Reuters) – Shares of Porsche AG had a neat start on Thursday after Volkswagen. (VOWG_p.DE) He defied volatile markets to list the 75 billion euro ($72 billion) sports car brand in Germany’s second-largest market.
Shares closed at 82.50 euros ($80.74), returning to the issue price from the session’s high of 86.76 euros.
Volkswagen has priced shares of Porsche AG at the higher end of the indicated range, and has raised €19.5 billion through the listing to fund the group’s electrification drive.
Register now to get free unlimited access to Reuters.com
Core investors, including the Qatar Investment Authority, T. Rowe Price, Norway’s sovereign wealth fund, and the Abu Dhabi Fund have demanded 40% of the share offering.
About 25% plus one common share went to the Porsche and . families
Shares rose at 86.76 late in the morning.
The stock performance puts Porsche’s valuation at around €75.43 billion, just below previous parent company Volkswagen, which is worth around €80.1 billion, and ahead of rivals such as Ferrari. (RACE.MI). It is the largest list in Germany since Deutsche Telekom (DTEGn.DE) in 1996.
Stocks in the Porsche SE (PSHG_p.DE), the largest shareholder in Volkswagen, which now also owns a blocking minority in the sports car brand, fell 10.9% as investors turned. Volkswagen shares are down 6.9% from Thursday’s open to €128.5.
Traders said some investors who bought Volkswagen and Porsche SE as an initial public offering could unwind their positions and switch to Porsche AG, undermining Volkswagen’s goal of raising its capital by offering the value of just one of its brands.
“Porsche has been and remains the pearl of the Volkswagen Group,” said Chris Oliver Schickentans, chief investment officer at Capital, fund manager. “The IPO made very transparent the value the market brings to Porsche.”
Volkswagen CEO Arno Antlitz told Reuters the listing had played its part in helping fund the electric car project.
Of the 19.5 billion euros raised from the IPO, about 9.6 billion will go to Volkswagen – just under a fifth of the €52 billion budget needed for electricity plans – with the rest distributed to shareholders as special dividends.
“We have a good financial position and strong cash flow to fund our electric mobility strategy ourselves,” said the CFO.
environment is not a dream
Cars of German company Porsche are parked outside the stock exchange ahead of Porsche’s IPO in Frankfurt, Germany, September 29, 2022. REUTERS/Kay Fafenbach
Volkswagen priced Porsche shares in the top of the range despite the broad weakness in stock markets after hot German inflation data and general market turmoil caused by rising interest rates.
“This is not exactly today’s IPO dream environment,” said Thomas Altmann, wealth manager at QC Partners.
Volkswagen said market volatility was precisely why fund managers badly needed a stable, profitable business like Porsche AG to invest in.
A banker involved in the deal described the Porsche listing as a one-off, predicting that the market would freeze again very soon.
The list broke records, raking in the highest amount since Deutsche Telekom in 1996.
But Porsche is trading at multiples of about 7.2 times its earnings – much less than Ferrari’s (RACE.MI) Multiples of 40.
Refinitiv data showed that companies in the region had raised $44 billion in capital market deals as of September 27, with just $4.5 billion from initial public offerings.
“There is a lot to like about the company, with its aggressive electrification plans, strong anticipated cash flow generation and premium market positioning,” Chi Chan, European equity portfolio manager at Federated Hermes Limited, told Reuters.
“However, it comes to the market at a time of unprecedented turmoil and consumer confidence is declining.”
Porsche CEO Bloom, whose dual role as new head of Volkswagen drew criticism from some investors, hailed the listing as a “historic moment” and dismissed the idea that he would at some point relinquish one of the two positions.
As many as 113,875,000 preferred shares of Porsche, which carry no voting rights, were sold in the initial public offering.
Bank of America, Citigroup, Goldman Sachs and JPMorgan acted as joint global coordinators and joint bookrunners for the transaction, while Mediobanca acted as financial advisor to Porsche.
(1 dollar = 1.0218 euros)
Register now to get free unlimited access to Reuters.com
Additional reporting by Victoria Waldersi, Emma Victoria Farr, Hakan Ersin, Christoph Stitz, Alexander Hubner, Sinead Cruz and Pamela Barbaglia; Written by Victoria Waldersi and Mathias Williams; Editing by Jane Merriman, Mark Potter and David Goodman
Our criteria: Thomson Reuters Trust Principles.