Porsche soars after historic $72 billion listing

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  • Stocks valued at the upper end of the indicated range
  • Largest listing in Germany since 1996
  • Stocks rise 3% despite weaker stock markets
  • IPO unlikely to reopen frozen markets -banker

FRANKFURT, Sept 29 (Reuters) – Shares of Porsche AG got off to a strong start on Thursday after Volkswagen (VOWG_p.DE) defied volatile markets to list the sports car brand at a valuation of 75 billion euros ( 72 billion dollars) in the second German market at the start.

Volkswagen priced Porsche AG shares at the high end of the indicated range and raised 19.5 billion euros through the IPO to fund the group’s electrification drive. As of 10:35 GMT, Porsche AG shares were trading down 3% from the issue price of 82.50 euros.

This brought Porsche AG’s valuation to 77.4 billion euros, close to the market capitalization of Volkswagen as a whole, which is worth around 80.1 billion euros, and ahead of competitors such as Ferrari (RACE.MI ). This is the largest listing in Germany since Deutsche Telekom (DTEGn.DE) in 1996.

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Oliver Blume, in an interview with Reuters, dismissed concerns about his dual role as CEO of Porsche AG and Volkswagen, saying the decision was made “very consciously”.

Porsche AG’s strong start came despite much weaker stock markets after the searing German inflation data. Shares of Volkswagen and the holding company Porsche SE (PSHG_p.DE), which owns a blocking minority in Porsche AG, fell 4.6% and 8%, respectively, as investors changed course.

“It’s not exactly a dream environment for an IPO today,” QC Partners wealth manager Thomas Altmann said.

Porsche’s IPO comes at a time when European stock prices face their worst year since 2009 as investors worry about a possible global recession amid runaway inflation, rising interest rates and war in Ukraine.

Porsche is a unique icebreaker for the IPO market, which will freeze again very soon, said a banker involved in the transaction.

Companies in the region raised $44 billion through capital markets transactions through September 27, according to Refinitiv data, with just $4.5 billion coming from initial public offerings.

“There’s a lot to love about the business, with its aggressive electrification plans, strong expected cash flow generation and premium brand positioning in the market,” Chi Chan, manager of the company, told Reuters. European equity portfolio at Federated Hermes Limited.

“However, it is coming to market at a time of unprecedented turmoil and consumer confidence is declining.”

Despite the euphoria surrounding Porsche’s IPO, further listings will remain difficult, said Malte Hopp, head of equity capital markets (ECM) for Germany and Austria at Citi.

Porsche against its rivals

Porsche AG chief executive Blume, whose dual role as new Volkswagen chief has drawn criticism from some investors, hailed the listing as a “historic moment” as he hugged colleagues and rang the bell on a crowded trading floor of the Frankfurt Stock Exchange.

Volkswagen said market volatility was precisely why fund managers badly needed a stable and profitable company like Porsche AG in which to invest.

“Porsche was and is the pearl of the Volkswagen Group,” said Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell. “The IPO has now made it very, very transparent what value the market brings to Porsche.”

Faced with tens of billions of dollars in software costs and a dramatic shift to electric mobility, Volkswagen executives had long considered listing Porsche, a move they hoped would raise much-needed cash and to increase the value of Volkswagen.

The Porsche and Piech families, whose Porsche SE holding company controls Volkswagen, will in turn solidify their control over Porsche AG as they will own 25% plus one ordinary share – with voting rights – in the sports car brand.

Up to 113,875,000 non-voting preferred shares of Porsche AG were sold in the IPO.

Bank of America, Citigroup, Goldman Sachs and JPMorgan worked as global coordinators and joint bookrunners on the deal, while Mediobanca acted as financial advisor to Porsche.

($1 = 1.0339 euros)

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Reporting by Victoria Waldersee, Emma-Victoria Farr, Hakan Ersen, Christoph Steitz, Alexander Huebner, Sinead Cruise and Pamela Barbaglia; Written by Victoria Waldersee and Matthias Williams; Editing by Jane Merriman, Mark Potter and David Goodman

Our standards: The Thomson Reuters Trust Principles.

Emma Victoria Farr

Thomson Reuters

European M&A reporting with previous experience at Mergermarket, Bloomberg The Daily Telegraph and Deutsche Presse Agentur.

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