IPO / ROUNDUP / ‘MM’: Volkswagen to examine the IPO of its subsidiary Porsche | 02/18/21

WOLFSBURG / STUTTGART (dpa-AFX) – At Volkswagen (Volkswagen (VW) vz) the simulation games for a possible IPO of the subsidiary Porsche are getting a new boost, according to a report. The issuance of own shares in the sports car and SUV brand that can be traded on the financial market could bring additional money to the company’s boss, Herbert Diess. In this way, the high double-digit billion investments for e-mobility and digital could be better paid for in the coming years. In terms of financial clout compared to Tesla, one could probably catch up a little.

The company is considering various possibilities to increase the market value – in the medium term this includes a Porsche listing, wrote the “Manager Magazin” on Thursday, citing insiders. However, in such a case, VW (Volkswagen (VW) vz) will sell a maximum of 25 percent of the shares, calculating with a value of 20 to 25 billion euros. According to the newspaper, a member of the group’s top management also pointed out that it would no longer work in 2021. Volkswagen itself did not want to officially comment on the subject. From the car manufacturer’s environment, it was said that various scenarios would generally continue to be examined as to how individual areas could be rearranged.

The VW preference share listed in the Dax (DAX 30) was up in the afternoon. Investors have been speculating for years that Porsche’s pearl of earnings could be turned into money that the Wolfsburg-based company could use in view of the upheaval in the industry. According to analysts, the daughter’s value does not really come into its own. The VW holding company Porsche SE (Porsche SE Vz) is already on the stock exchange.

A central goal of Diess is to make the group more valuable. In 2019, VW launched the commercial vehicle holding company TRATON on a smaller scale. The topic was also given new food after the car and truck manufacturer Daimler recently announced a split, which was well received on the financial market.

The traditional carmakers are increasingly falling behind with investors compared to the electric car pioneer Tesla. Elon Musk’s California-based company now has around three times as much market value as VW, Daimler and BMW put together. Currently the so-called market capitalization – i.e. the total price of all shares in circulation – is a good 630 billion euros. For VW it is almost 90 billion euros, for Daimler around 70 and for BMW 46 billion euros. However, these figures do not necessarily reflect the real economic fundamentals, but above all the expectations of the markets for future business.

Diess wants to transform the group from a pure vehicle manufacturer to a software and service-driven mobility and technology group. That swallows billions upon billions, but on the other hand it is also seen as indispensable in order to protect oneself against the market power of the American and Asian IT giants as well as newcomers like Tesla. Apple is testing technology for autonomous driving – for years there have been persistent rumors that the company could get into car manufacturing itself with partners. Google (Alphabet C (ex Google)) invests large sums of money in technologies related to autonomous driving.

“Our market valuation is still in the area of ​​the old auto industry,” Diess recently told Bloomberg news agency. “This leads to serious disadvantages for us when it comes to access to the resources we need.” But fresh money would also help the VW Group to overcome the current slump in sales caused by the corona pandemic. The group closed 2020 with a drop in sales of a good 15 percent. The year-end spurt was achieved, and deliveries of electric and hybrid vehicles also increased significantly. However, this was also due to the government purchase subsidies and – in the case of other drives – to pull-forward effects for customers due to the end of the VAT reduction.

During the first lockdown last spring, VW temporarily lost up to 2 billion euros in liquidity per week due to closed plants and ongoing costs. The company has already issued new bonds to stabilize the available financial cushion. The group recently stated the so-called net cash flow in its core auto business to be around 6 billion euros. Preliminary financial data for the Corona year 2020 are expected from the end of February./jap/DP/fba

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