Dhe stock market plans for the sports car manufacturer Porsche have matured over months. But when they become public, things go haywire in the parent company, Volkswagen. This is shown again when VW invites the media and financial analysts to a conference call at short notice on Friday morning. The previous evening, the supervisory board had laid down the cornerstones for the IPO.
Now details will follow. But CEO Herbert Diess, who dialed in on his phone, is struggling with a bad connection and can hardly be understood. “I’m afraid we lost him,” says one of the company spokespersons, who is trying to steer the seemingly improvised meeting and fears at that moment that his most important manager has been thrown out of the call. Then Diess can suddenly be heard again and speaks of flexibility and unused potential that would be raised with the initial public offering, or IPO for short.
Prices of VW and Porsche in the plus despite stock market chaos
The financial markets don’t care about the chaos. After the share prices of VW and the holding company of the shareholder families, the Stuttgart-based Porsche SE, had already risen sharply in the past few days, they were again up 4.8 and 4.3 percent on Friday. Investors hope for further price gains if the values in the VW group become more transparent through a separate listing of its sports car icon. The Porsche and Piëch families also support the plans, as do the works council and the state of Lower Saxony, which has shares in VW. Chief Financial Officer Arno Antlitz, who was the only participant to lead the call with any degree of confidence, puts it this way: A model has been found from which everyone involved has benefited. The typical Wolfsburg reconciliation of interests seems to have been successful, so that the IPO can take place in the fourth quarter, depending on the stock market environment.
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The benefit for the employees is particularly obvious, which the employee representatives around Daniela Cavallo, head of the works council, knew how to skilfully negotiate. Together with Lower Saxony, they can block resolutions in the supervisory board, which is why their placement was important. The key issues paper now states that a significant part of the proceeds from the IPO should flow into German plants and an accelerated conversion to e-mobility, which is good for employment. There are also tangible payments: each of the 130,000 employees at Volkswagen AG and VW Sachsen GmbH is to receive 2,000 euros if Porsche actually goes public. In purely mathematical terms, this adds up to 260 million euros. In the telephone circuit, CFO Antlitz even speaks of 300 million euros, which should flow to the workforce through this “employee participation”.
For works council chief Cavallo, the signal to the employees is just right, because she will soon have to face a works council election at the Wolfsburg headquarters. There the resentment was great at last. Because the workforce of the VW brand struggled with low capacity utilization, which had to do with the semiconductor crisis. The group preferred to put scarce control chips in high-margin models from Porsche and other premium brands, which the Wolfsburg employees felt painfully. Instead of lavish success bonuses, they only received a minimum payment of 1700 euros for 2021, plus an outstanding corona bonus of 500 euros. The prospect of a special distribution in connection with Porsche’s IPO should calm things down a bit. Additional funds for battery cell factories are also in prospect. This is relevant for the state of Lower Saxony, which, after Salzgitter, would like to have another location in East Frisian Emden. CFO Antlitz emphasizes that an IPO of the battery business cannot be ruled out should VW come to the conclusion that this makes sense for the further development of the segment.
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The Porsche and Piëch families, in turn, want to buy 25 percent of the sports car manufacturer’s ordinary shares and thereby gain more access to the nucleus of their ascent. Currently, they only hold an indirect stake in the company, through their Porsche SE, which holds 53.3 percent of VW’s ordinary shares. The direct participation now planned is complex and will cost a lot of money. The VW Group wants to distribute almost half of its income from the IPO as a special dividend, which means that Porsche SE will receive considerable funds.
In purely mathematical terms, however, this will not be enough to fully finance the planned purchase of Porsche ordinary shares. The holding company may have to take on several billion euros in debt or sell part of its VW shares. There is enough leeway, emphasizes a spokesman who refers to Porsche SE’s “excellent equity ratio” and “positive net liquidity”: “We have drawn up rock-solid financing plans in order to be robustly positioned in different price scenarios for the IPO.”
How much money is left for investments in the VW Group depends on the valuation that Porsche achieves on the stock exchange. Assuming a company value of EUR 90 billion, the group will receive around EUR 23 billion from the sale of common shares to the families and the planned placement of a quarter of the preferred shares on the market. After deducting the special dividend and employee participation, around 11 billion euros remain.
But money alone is just one of many factors that, according to CEO Diess, speak in favor of the IPO. It’s about raising the profile and value of the Porsche brand and giving it entrepreneurial freedom, he says in the call, when he’s easy to understand for a while. VW is becoming more flexible and can react better to upheavals – to the benefit of the entire group.