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Porsche's assets could already be as high as 90 billion euros, which will put the company on track to become one of the biggest IPOs in the industry in years.
Author 丨 North Shore
Responsible editor 丨 Li Sijia
Editor 丨Zhu Jinbin
According to the latest blooming news, Volkswagen Group is in the process of in-depth discussions on the initial public offering (IPO) of its Porsche brand, and the spin-off or IPO will help increase the market value of Volkswagen as the parent company and provide more abundant funds for the electrification transformation that has arrived.
Volkswagen said in a statement on Tuesday that it had reached a framework agreement with Porsche that laid the groundwork for a potential IPO. Volkswagen stressed that although Porsche's IPO has entered a critical stage of in-depth discussion, it still needs the company's management and the supervisory board to sign the framework agreement, and some decisions need to be supplemented in the future, and there is still a long way to go before the final decision.
Bloomberg Intelligence, a Bloomberg think tank, expects Porsche to be valued at between €60 billion and €85 billion, compared to the current market capitalization of the entire Volkswagen Group at around €112 billion.
The industry generally believes that Porsche's listing is highly likely to create a new IPO record in automotive history, and in the past year, the brand's potential IPO has boosted the mass stock market several times. However, due to the complex interests within the group, Volkswagen has not yet made any decisions.
Sources told Reuters last year that the Porsche and Pierch families, which control the Porsche brand, were considering directly holding shares in the new post-IPO company.
The listing of Porsche will provide the group with new financing options and more abundant cash flow for transformation. Volkswagen' normal operation as a traditional manufacturing giant relies heavily on its own generation of sufficient cash or the issuance of bonds – because of its complex shareholder structure, the group cannot have the option of raising new shares like Tesla, and there is no new force that can dilute control about 90% of Volkswagen's voting key rights shares;
About a year ago, Volkswagen CEO Herbert Diess was reported to have rejected Porsche's listing after both Bloomberg and Reuters revealed news that Porsche might be going to IPO. Later, a Porsche spokesperson made public about the brand's internal attitude towards the IPO, saying that the IPO would make the Porsche brand more independent, and the benefits outweighed the disadvantages.
Porsche CFO Lutz Meschke first presented the benefits of an IPO in 2018, saying the move could unlock value and replicate Ferrari's successes from years ago. However, the listing review at that time was not supported by the Volkswagen Group.
Volkswagen's many discussions for Porsche's IPO in recent years have highlighted the urgency of automakers to obtain more funds, especially in the current era of electrification transformation, providing more cash flow for the two "money-burning pits" of electrification and autonomous driving, which will become the most far-reaching and critical issues in the entire automotive industry in the next few decades.
A growing number of automakers are shocked by Tesla's $886 billion market valuation, including Volkswagen. To this end, the focus of these traditional manufacturing in recent years has shifted to the electric vehicle business and new technologies, and through the development of more new businesses, persuade investors to raise their own stock prices. But so far, such efforts have had limited effect.
Porsche's business is in a better phase of growing, profitable and profitable. Currently, Porsche is the main driver of Volkswagen's profits and one of its most well-known brands, which is the basis for subsequent successful IPOs and high valuations.
Industry analysts estimate that Porsche's assets could already be as high as 90 billion euros, which will make the company one of the biggest IPOs in the industry in years. Analysts also said Volkswagen needs to keep at least 75 percent of Porsche in order to maintain control over the company's cash flow.
However, porsche listing may still be blocked by the Volkswagen board of directors, the board of directors of the Volkswagen Group is known for its factionalism, and such a major event as the Porsche spin-off is bound to bring about a huge internal conflict of interest.
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