Olivia Cavallaro Auto 09.06.2022 04:Sep AM EDT

Volkswagen Announces Plans for Porsche IPO Towards End of 2022

The German carmaker signaled its intention to float the sports car brand later this year.

On Monday, Volkswagen announced its plans for its subsidiary Porsche to be listed on the stock exchange, sparking what would be the world's largest listings in the face of global turmoil and an energy crisis in Europe. The German carmaker published an intention to float for an initial public offering or IPO sometime late this month or early October, which will be completed by the end of 2022.

Volkswagen's board decided to pursue an IPO of the preferred shares of Porsche AG "with the target to list them on the regulated market of the Frankfurt Stock Exchange" in the coming weeks, a statement from the company said, as per DW. However, the Porsche IPO will still be "subject to further capital market developments."

Volkswagen initially signaled its intention to float for a Porsche IPO on February 24, the day Russia launched an unprovoked attack on neighboring Ukraine.

How Volkswagen Plans to Put Porsche IPO in the Stock Market

There isn't much certainty yet on how the Porsche IPO will fare. In fact, sources close to the matter at Volkswagen said that the company might extend the four-week period for interested buyers if investors remain unattracted enough to put in the funds. Right now, the decision is merely a "technical go-ahead," one of the sources said, as per CNBC.

The Porsche IPO is expected to be valued at about $60 to $85 billion, making the IPO the largest in German history and the biggest in Europe since 1999. In order to tap into the sports car brand's loyal fan base, preferred shares will be offered to investors across Europe, specifically in France, Spain, and Italy.

Volkswagen said it approved a 25% plus one share of regular shares in Porsche AG to be purchased by Porsche SE to give the Porsche and Piech families better control over the sports car brand. The German carmaker said that the IPO would also help boost the company's transformation and software and electronic vehicle or EV offering.

Why Volkswagen is Launching the Porsche IPO

Volkswagen Chief Financial Officer Arno Antlitz this week offered an update on the company's planned IPO of Porsche, saying that things are "progressing according to plan." He added that this would give the sports car maker "more flexibility" to boost transformation, especially in the age where there is an increased demand for EVs.

Things are looking pretty well for Porsche, however, as it already has seen some investor interest, Bloomberg reported. In fact, Porsche has already secured pre-orders well beyond the IPO valuation of $85 billion. Moreover, investors such as T Rowe Price Group Inc. and Qatar Investment Authority have already expressed interest in subscribing to the IPO. Other investors that Porsche has been courting include Dietrich Mateschitz, the founder of Red Bull, and LVMH Chairman Bernard Arnault.

As a luxury brand, Porsche is capable of increasing its prices despite the current market conditions, making it a product that brings in money for the Volkswagen Group. In fact, the sports car maker's operating profit increased 22% during the first half of 2022 compared to an 8% decline in the Volkswagen brand, which is geared towards the mass market.