Volkswagen weighs IPO for Porsche over Tesla growth

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Date: 25.02.2021

Volkswagen AG’s potential listing of Porsche would be a strategic watershed moment and indicate the unprecedented upheaval of the auto industry may only just be beginning.

“There’s a loss of power due to the low valuation, which Diess has complained about in the past, and that’s a significant disadvantage,” said Bankhaus Metzler analyst Juergen Pieper. “An IPO of Porsche would be the silver bullet.”

VW’s preferred shares rose as much as 1% shortly after the start of regular trading in Frankfurt.

Porsche’s appeal is obvious to investors. Bloomberg Intelligence analyst Michael Dean reckons the 911 maker could stand up a 110 billion-euro ($133 billion) valuation in an initial public offering, roughly 20 billion euros more than investors value VW at now.

But getting such a deal done won’t be simple because of the institutional hurdles that have stood in the way of other attempts Diess, 62, has made to shake up VW since he became CEO in 2018. Major decisions must be approved by the company’s dominant and oft-at-odds shareholders led by the Porsche and Piech family and German state of Lower Saxony, which tends to side with powerful labor unions.

What Tesla’s meteoric rise has done, however, is send a clear signal to Diess that extreme measures must be taken to get the capital markets to come around to “old-auto” companies. VW’s review of options for Porsche comes on the heels of Daimler AG deciding to spin off its truck unit after years of management opposition to such a move. Its shares have advanced 13% since then and are hovering around a three-year high.

 

The article was prepared based on the information: Fortune 

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