Porsche Shares Jump in Blockbuster Market Debut

Author: Yuvi September 29, 2022

Porsche Shares Jump in Blockbuster Market Debut


Under the terms of the initial offering, Volkswagen sold 12.5 percent of Porsche’s stock to the public in the form of nonvoting shares. About 40 percent of that was bought by four big investors, including sovereign wealth funds associated with Qatar, Norway and Abu Dhabi and the American money manager T. Rowe Price.

Updated

Sept. 29, 2022, 9:29 am ET

Another 12.5 percent of Porsche stock — consisting of voting shares — was sold to the Porsche and Piëch families, descendants of the man who designed the original Volkswagen Beetle for Adolf Hitler, and the majority shareholders of Volkswagen. That deal will give the families enough voting power to veto any business decisions at Porsche they dislike.

But some aspects of the offering drew scrutiny from critics.

Porsche’s multibillion-dollar valuation suggests that the business accounts for 90 percent of what Volkswagen is worth on the stock market, despite generating only 4 percent of the company’s automotive revenue. That is not a ringing endorsement of the rest of Volkswagen, which has been struggling to overcome problems with software for its line of electric vehicles.

Skeptics raised other concerns about Porsche and its stock sale. Among them is the company’s corporate governance: Oliver Blume, Volkswagen’s chief executive, will also hold that title at Porsche. The offering’s own prospectus acknowledges that the interests of Volkswagen and Porsche may not always align and that Mr. Blume’s dual role could “result in conflicts of interest.”

In a research note earlier this week, analysts at HSBC valued Porsche at €44.5 billion, pointing in part to questions about the company’s independence.

Others questioned whether Porsche deserved a valuation that is loftier than rivals like Mercedes-Benz, whose market valuation as of Thursday was €57.5 billion despite producing more vehicles. Both command valuations are lower than that of Ferrari, which shipped just 11,155 of its handmade supercars last year, compared with Porsche’s 300,000.

But investors in Porsche’s initial offering appeared undeterred by those questions.

The order book for the offering was oversubscribed within hours of its opening last week, according to a person with knowledge of the deal, who spoke on condition of anonymity because he was not authorized to speak publicly about the process.

A higher than normal percentage of prospective buyers included individual investors and Porsche fan clubs, this person added. Some investors had even sent pictures of their 911 sports cars, in an effort to convince Porsche executives and bankers to sell them more shares.

Jack Ewing contributed reporting.

29 September, 2022, 7:03 pm

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