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Wednesday, May 18, 2022

Volkswagen confirms it is considering Porsche float

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The Porsche marque could soon enjoy more independence from the mothership, and raise billions in euros for Volkswagen.

Overnight Volkswagen and the Porsche-Piech families confirmed they “are currently in advanced discussions regarding a potential IPO of [the Porsche brand]”.

The two parties have negotiated “Framework Agreement” for the flotation of the Porsche marque, but they stress approval for this agreement still “depends on the approval of both parties’ boards”, as well as market conditions and various review processes. As such, the content of the agreement is “currently open” and subject to change.

If Porsche is floated — partially or fully — on a stock exchange, it could raise billions in euros to help fund the Volkswagen group’s investments in electric vehicle architectures and technology, as well as self-driving car development.

Speculation about a possible Porsche float has been gone around for years, with a report at the end of last year estimating the value of the luxury automaker at between €45 billion and €90 billion ($71 billion to $142 billion).

It’s possible the Porsche-Piech families will participate in the Porsche float, and buy a direct stake in their namesake automaker.

Thanks to Volkswagen’s complicated corporate structure, the automaker is largely limited to raising money through the issuing of bonds or from its own cashflow. Unlike many firms, it is unwilling to issue new shares as this would dilute the voting rights of the controlling Porsche-Piech family.

Their Porsche SE investment company owns just over 30 per cent — and around 53 per cent of the voting rights — of Volkswagen AG, which in turn completely owns the Volkswagen, Seat, Skoda, Audi, Porsche, Lamborghini and Bentley brands. Through the Porsche marque, Volkswagen also holds a minority stake in former subsidiary Bugatti.

If you want to read more about the long and complex history between the Porsche-Piech families with Volkswagen, check out our Which brand owns which, and how did we get here? feature.

The German state of Lower Saxony has a 20 per cent shareholding in the automaker, and thanks to the Volkswagen Law effectively has veto rights for all major decisions at the firm.

While Porsche’s 301,900 sales only make up 3.5 per cent of the Volkswagen Group’s 8.6 million sales last year, the luxury marque’s hefty profit margins mean it constitutes a significantly larger proportion of the automaker’s profits.

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