By Jan Schwartz and Emma-Victoria Farr
HAMBURG/FRANKFURT (Reuters) -Volkswagen’s leadership will meet later on Monday to decide on whether to proceed with the much-anticipated listing of Porsche, as an escalation in an energy standoff between Russia and Europe has caused major market turbulence.
Volkswagen (ETR:) will publish a so-called intention to float for the potential initial public offering once its supervisory board gives the go-ahead at a meeting late on Monday.
But the carmaker could shorten or extend the four-week period for buyers to express interest, or pull its plans altogether, should investors not express enough enthusiasm for the listing, two sources close to negotiations said.
“It would be the technical go-ahead, nothing more,” one of the sources said of a decision in favour of triggering a listing. “It’s paving the way, but this would not guarantee that the stock market bell will ring in the end.”
Volkswagen’s management and supervisory boards will meet later on Monday to discuss whether the listing should take place in late September or early in October.
If investors value Porsche AG at the high end of current estimates, ranging between 60-85 billion euros ($60-$84 billion), the IPO of the iconic sportscar brand could be the largest in German history and the biggest in Europe since 1999, according to Refinitiv data.
ACCELERATE TRANSFORMATION
In an internal interview published on Monday, Volkswagen CFO and COO Arno Antlitz reiterated the carmaker’s argument that a listing was key to funding its 52-billion-euro transition to electrification.
Porsche’s status as a specialised luxury brand able to bump up prices makes it a moneymaker for the behemoth Volkswagen Group. Its operating profit jumped 22% in the first half of this year in contrast to an 8% fall at the mass market-oriented Volkswagen brand.
“This is a key element for the Group, especially because the possible proceeds would give us more flexibility to further accelerate the transformation,” Antlitz said in the interview.
But some investors have questioned the timing for a stock market debut, with European stocks on a downward spiral, inflation at record highs and Russia halting gas supply.
Luxury carmakers are no exception to the freefall, with Aston Martin’s stock down 11% on Monday, having earlier dropped 14%, after launching a 575.8 million pound ($662.9 million) rights issue of four new shares for each existing share.
“The timing is fundamentally bad,” Ingo Speich, head of sustainability and corporate governance at top-20 Volkswagen investor Deka Investment, said, declining to comment on whether Deka would buy Porsche shares. “Market conditions are currently very unfavourable.”
($1 = 0.8687 pounds)
($1 = 1.0084 euros)
