FRANKFURT: Porsche AG shares made a strong start on Thursday after Volkswagen defied volatile markets to list the sports car brand at a valuation of 75 billion euros ($72 billion) in Germany’s second-biggest market debut.
Volkswagen priced Porsche AG shares at the top end of the indicated range and raised 19.5 billion euros via the listing to fund the group’s electrification drive.
The shares traded at 82.90 euros ($80.66) at 1347 GMT on Thursday, close to the issue price of 82.50 euros, after peaking earlier at 86.54.
That put Porsche AG’s valuation at about 75.43 billion euros, only slightly below former parent Volkswagen, which is worth around 80.1 billion euros, and ahead of rivals such as Ferrari. It is Germany’s biggest listing since Deutsche Telekom in 1996.
Shares in Porsche SE, Volkswagen’s largest shareholder, which now also owns a blocking minority in the sportscar brand, were down by 10% as investors switched across. Volkswagen’s shares were down 6.9% from Thursday’s open to 129.1 euros at 1343 GMT.
Traders said some investors who bought Volkswagen and Porsche SE as an IPO play could be unwinding their positions and switching into Porsche AG, undermining Volkswagen’s aim of bumping up its capitalisation by showcasing the value of just one of its brands.
“Porsche was and is the pearl in the Volkswagen Group,” said Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell. “The IPO has now made it very, very transparent what value the market brings to Porsche.”
Volkswagen CEO Arno Antlitz told Reuters the listing had done its part in helping to fund the carmaker’s electrification drive.
Of the 19.5 billion euros raised from the IPO, around 9.6 billion will go to Volkswagen - just under a fifth of the 52-billion euro budget needed for electrification plans - with the rest distributed among shareholders as a special dividend.
“We are well set-up financially have strong cash flows to fund our electromobility strategy ourselves,” the chief financial officer said.
‘NOT A DREAM
Volkswagen priced Porsche AG shares at the top of the range despite broadly weaker stock markets after red-hot German inflation data and general market turmoil amid soaring inflation and rising interest rates. “This is not exactly a dream environment for an IPO today,” said QC Partners wealth manager Thomas Altmann.
Volkswagen has said the market’s volatility was precisely why fund managers were sorely in need of a stable and profitable business like Porsche AG in which to invest.
A banker involved in the transaction described the Porsche listing as a one-off, predicting the market would freeze over again very soon.
The listing broke records, reaping the highest amount since Deutsche Telekom in 1996. But Porsche is trading at a multiple of around 7.2 times its earnings - far below Ferrari’s multiple of 40.