VW defends timing and structure of Porsche IPO

Volkswagen has defended the timing and structure of the long-awaited listing of its Porsche brand, as it seeks to reassure investors with concerns about corporate governance and the gloomy economic environment.

“There’s a lot of capital in the market and we think that the Porsche IPO could be an icebreaker . . . and show what’s possible,” said Porsche chief executive Oliver Blume, who also took over as VW boss earlier this month.

Blume’s comments came after VW confirmed late on Monday that it intended to float a small portion of Porsche’s shares, with retail investors only being offered non-voting stock.

The group said it aimed to take its most profitable subsidiary public in Frankfurt towards the end of this month or at the start of October, barring a significant shift in market conditions.

It prompted VW’s shares to rise 3 per cent by mid-afternoon on Tuesday in Frankfurt.

Bankers involved in the transaction said investor interest so far pointed to a valuation close to €80bn, the upper end of analysts’ estimates.

If achieved, that would value Porsche’s initial public offering at about €10bn, just behind Deutsche Telekom’s $13bn public debut in 1996 in the list of largest German flotations.

But the thin size of the float, which involves the sale of just 12.5 per cent of the sports car maker as well as concerns about governance after the appointment of Blume as VW boss, were not well received by investors, according to two people familiar with the discussions.

Porsche had initially pitched the partial IPO as a route to “increased corporate independence” for the Stuttgart-based marque and said it would have more autonomy as profits would no longer be handed over to VW.

Months later, former VW chief executive Herbert Diess was suddenly defenestrated by shareholders and unions, leading to the appointment of Blume who will maintain both roles even once the IPO is completed.

“In my role as Volkswagen Group chief executive, I will at the same time work on ensuring that synergies continue to exist in both directions in terms of sales volume, components, technologies or plans,” Blume said on Tuesday.

“If conflicts of interests nevertheless arise, we will strictly separate matters,” he added, emphasising that while VW and Porsche “have the same interests”, the Porsche board would always make “independent decisions”.

VW’s chief financial officer Arno Antlitz defended the structure of the planned flotation, which will involve only 10 per cent of Porsche shares on offer after VW shareholder Qatar earmarked 2.5 per cent, with almost half of the IPO proceeds paid out as a special dividend.

“This is the best of both worlds,” Antlitz said on Monday. “It is half way between an IPO and a spin off, and from our point of view very well balanced.”

As part of the transaction, VW will split Porsche’s share capital into two and allow the Porsche-Piëch families that control VW to buy 25 per cent of voting shares.