Germany’s Volkswagen and the Piëch and Porsche families last week confirmed they had reached a preliminary agreement to explore a Porsche IPO that could value the luxury German carmaker at as much as €200 billion. The marque is controlled by VW, the second largest carmaker in the world, which holds around 53% of the company’s voting rights and around 38% of its equity while the Piëch and Porsche families also still own major stakes.
While Porsche vehicles account for just 3% of Volkswagen’s sales, a Financial Times analysis that looked at comparable valuations like the $875 billion Tesla is worth indicated the marque could be worth as much as €200 billion as a stand-alone company. That seems ambitious when VW itself is currently valued at less than €105 billion and the stockbroker Jefferies estimates somewhere between €60 billion and €90 billion as more realistic based on multiples of 2 to 3 times revenues and 20 to 30 times profits.
However, while Jefferies also thinks any IPO valuation is likely to be discounted due to legacy corporate governance issues, Stuttgart-based Porsche is undeniably one of the world’s most famous marques. The company was founded over 90 years ago by Ferdinand Porsche and Anton Piëch and its 911 model is one of the best known sports cars ever built.
Volkswagen and Porsche have connections that stretch back to before the Second World War and collaborated for decades before the 2007 deal that saw the larger mass market manufacturer take a controlling share. VW also owns the Audi, Bentley, Lamborghini and Bugatti luxury marques as well as the mass market marques Skoda and Seat.
Last week all three owners of Porshe confirmed they are in “advanced discussions” around an IPO with the caveat:
“Whether a framework agreement is concluded … is currently open and depends on the approval of both parties’ boards.”
VW would be expected to reinvest funds raised by the sale of equity in Porsche via an IPO into its ambitious programme to pivot towards becoming a market leader in all-electric vehicles.