Amid recession fears, falling stock prices and growing market turmoil, the biggest market debut of the year is the emergence of an automaker whose car prices could hit six figures.
Porsche, the 91-year-old German company behind iconic models like the 911, became a breakout star in the market when it began trading on Thursday.
Porsche shares rose 2% on its debut on the Frankfurt Stock Exchange to €84 per share, giving the company a valuation of €77 billion ($75 billion). This bucked a broader decline in European market indices on Thursday, including Germany’s DAX.
The underwriter of the transaction is Offering pricing The previous night was at €82.50, the high end of the expected range. By Thursday’s market close, trading was flat at €82.84 per share.
The initial public offering marks Porsche’s return to the public market after a ten-year hiatus. The Volkswagen Group has become a standout among Volkswagen’s established brands, acquiring the company in 2008 after Porsche’s unsuccessful attempt to acquire the much larger German automaker.
Porsche’s listing also marks a rare bright spot for the once-thriving business of taking companies suffering from market turmoil public as investors flee in search of safer assets like the US dollar. I’m here. Globally, the number of initial public offerings is down 40% from last year, according to Refinitiv.
The public portion of the Porsche stake sale raised 9.4 billion euros for Volkswagen. The offering included a few nods to Porsche’s most famous model, the 911. Its total shares are his 911 million and the ticker symbol is his P911.
On that scale, Porsche’s debut trails only Italian energy company Enel and Germany’s Deutsche Telekom in the European rankings of early products, according to Refinitiv. This is his largest IPO held on the continent since the 2000s.
Volkswagen executives and their bankers insist Porsche can buck the dire trend of IPOs. has been trying to persuade us that there is an operating margin of almost 20%. And the strategy to shift to battery-powered vehicles, with the Taycan sedan leading the way.
A lot was at stake for the first sale. Volkswagen plans to use about half of the proceeds from its initial public offering, which has raised a total of around €20 billion, to fund its transition to electric vehicles. The rest will be paid to Volkswagen shareholders.
Under the terms of the IPO, Volkswagen sold 12.5% of Porsche’s shares to the public in the form of non-voting shares. About 40% of that was bought by his four big investors, including Sovereign Wealth Funds linked to Qatar, Norway and Abu Dhabi, and US asset manager T. Rowe His Price.
Another 12.5% of Porsche shares, consisting of voting shares, are descended from the man who designed the original Volkswagen Beetle for Adolf Hitler, and belong to the Porsche and Piëch families, Volkswagen’s major shareholders. Sold. The deal would give the family enough voting rights to reject business decisions at Porsche that they disliked.
However, some aspects of the offering received scrutiny from critics.
Porsche’s multi-billion dollar valuation suggests the business accounts for 90% of Volkswagen’s stock market value, even though it generates only 4% of Volkswagen’s automotive revenue doing. This is not a strong endorsement of the rest of Volkswagen, which is struggling to overcome issues with its electric vehicle software.
Skeptics have raised another concern about Porsche and its stake sale. Among them is the company’s corporate his governance. Volkswagen CEO Oliver Blume will also hold the position at Porsche. The offering’s own prospectus acknowledges that Volkswagen’s and Porsche’s interests may not always align, and that Bloom’s dual role could “lead to conflicts of interest.”
In a research note earlier this week, HSBC analysts valued Porsche at €44.5 billion, pointing to some questions about the company’s independence.
Others wondered whether Porsche deserved higher marks than rivals like Mercedes-Benz.Ferrari shipped only 11,155 hand-built supercars last year, while Porsche has shipped 300,000 units.
But investors in Porsche’s first offering seemed unfazed by these questions.
Orders for the sale were oversubscribed within hours of last week’s disclosure, said the people, who asked not to be identified because they weren’t authorized to speak publicly about the deal.
A higher than usual percentage of prospects included private investors and Porsche fan clubs, he added. Some investors were sending pictures of the 911 sports car to persuade Porsche executives and bankers to sell more shares.
Jack Ewing contributed to the report.