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The IPO of Porsche promises to be difficult


by Emma Victoria Farr

LONDON (Reuters) – Porsche could be forced to start the process of listing on the basis of a lower-than-expected valuation as difficulties mount for the German car group, two people familiar with the matter said. .

The prospect of a lower valuation would be a setback for the families at the helm of the company who are pushing for an IPO to finance the expensive transition from combustion-powered sports cars to electric.

Initial estimates that valued Porsche, controlled by Europe’s biggest automaker Volkswagen, at more than 80 billion euros, are high, the sources say.

They believe that a lower valuation may be needed in the face of the hurdles of war, recession threats and energy shortages to secure what could be one of the biggest IPOs in the world.

Porsche may have to settle for 60 billion euros, said one of the sources, adding that the owners would not accept anything less.

Another source also added that the automaker’s owners have different views on the value to be given to the brand. A third person involved in the preparations said investors have yet to agree on a valuation formula.

This week, Porsche executives presented their business plan to investors. Lutz Meschke, chief financial officer, told reporters the automaker was “financially resilient” and “well prepared for the next steps.”

Porsche estimated its turnover at more than 38 billion in 2022, against 33 billion in 2021, despite a 5% drop in deliveries in the first half of this year.

However, some investors remain hesitant.

Last month Bernstein Research pegged Porsche’s “fair value” at around 75 billion euros, calling it “a great company but [ce n’est] not Ferrari” because of the latter’s higher margins.

One of Volkswagen’s top 20 shareholders told Reuters he doesn’t look favorably on the IPO because only a small amount of shares will be sold, giving new entrants little leverage. shareholders.

Porsche would be better off staying within the Volkswagen Group, while the IPO would not “create value” in the long term, added the latter, who asked not to be named.

Earlier in the week, Oliver Blume, CEO of Porsche, and Lutz Meschke sounded confident in their presentations.

Business has been strong during the pandemic, Oliver Blume said. “There is a great need in the capital markets and a lot of money to invest”.

Bankers handling the deal intend to study market conditions at the end of August, with a decision from Porsche’s board of directors and an IPO document that could be published shortly thereafter.

A Porsche spokesman said there were no “new decisions” regarding its IPO plans, while Volkswagen declined to comment.

SWITCHING TO ELECTRIC

The push for an IPO comes as German automakers seek to sever the tie with diesel and petrol engines in order to move towards quieter and greener electric models.

Porsche wants 80% of its car sales to be electric by 2030, around four times the current level, while Volkswagen has also embarked on this ambitious shift towards electric vehicles, batteries and software. . The IPO is intended to finance this change.

If the listing does not take place or if it takes place only with a discount, there will be less to invest.

An IPO would also shift the balance of power within Europe’s biggest automaker, Volkswagen, which has controlled Porsche since a failed takeover attempt more than a decade ago.

However, the economic obstacles are considerable.

Just $2.3 billion was raised in German capital markets this year, down 90% from the previous year, according to Refinitiv data. Only 12.5% ​​of Porsche shares will be in free circulation, with valuations of European automakers falling since the start of 2022.

Luxury car makers have been particularly hard hit. Aston Martin’s market capitalization has lost 57% of its value since the start of 2022, and Ferrari almost a third.

Porsche could be compared to highly valued listed luxury brands, such as French luxury house LVMH, but it still remains in the shadow of Tesla, says a banker involved in the case.

(Additional reporting Christoph Steitz in Frankfurt, Victoria Waldersee in Berlin and Lucy Raitano in London; French version Alizée Degorce, editing by Kate Entringer)



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