Following months of speculation, the multinational auto giant announced on Monday that it plans to spin off the storied sports car maker, according to Reuters. The initial public offering (IPO), which could happen later this month or in early October, could be one of the world’s largest listings.
Analysts expect a valuation between €60 billion ($59.6 billion) and €85 billion ($84.5 billion) for the high-performance automaker. If it does come in near the high end of estimates, that would make the Porsche IPO the largest in German history and the biggest in Europe since 1999.
In preparation for the listing, Porsche stock has been split into 50 percent ordinary shares and 50 percent nonvoting preferred stock, according to The Wall Street Journal. Volkswagen will sell 25 percent of the marque, split equally between voting and nonvoting shares. The shares without voting rights will be floated, while the rest will be sold to the automaker’s heirs, the Porsche and Piëch families. Volkswagen will retain 75 percent ownership of Porsche, but the voting shares will give its heirs a blocking minority, granting them greater control over the company and its board going forward. The Qatar Investment Authority is expected to buy 4.99 percent of the preferred stock, which would make it a cornerstone investor.
If the IPO is successful, nearly half the proceeds would be distributed to Volkswagen shareholders as a special dividend in early 2023. Proceeds will also be used to build more EVs. Volkswagen has previously said it plans to spend $88.4 billion on the development of battery-powered vehicles over the next five years. Its aim is for EVs to make up a quarter of its sales by 2026.
The IPO comes at a particularly delicate time for the stock market. The war in Ukraine and high inflation have wreaked havoc on the global economy in 2022. Volkswagen is confident that the time to spin off Porsche is now, but has said the listing and timing are “subject to further capital market developments.” Reuters reports that they may extend the period for buyers to express interest, or call off the listing completely, should enthusiasm not be high.
It’s hard to imagine that will happen, though. This is Porsche, a company that generated $32.9 billion in revenue last year, that we’re talking about after all.