Rumors of a Porsche initial public offering (IPO) have been swirling for months now. However, today’s news may seal the deal. As per a Bloomberg report, Volkswagen (OTCMKTS:VWAGY) has decided on the banks leading the Porsche IPO this year.
Indeed, Europe’s largest automaker is taking one of its largest sports car brands public, with Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and others as coordinators of the public debut.
For all intents and purposes, this timing makes sense. Volkswagen has been clear about its intentions to expand into the electric vehicle (EV) space. Given the success of its ID.4 EV and the Porsche Taycan, an IPO could provide the automaker with the financial runway necessary to grow production. Early estimates value Porsche as high as $102 billion. This is roughly akin to VW’s $125 billion market capitalization.
The move to bring Porsche public closely mirrors a similar endeavor which separated Ferrari (NYSE:RACE) from Fiat Chrysler, earning droves of investments in the process. This makes sense given Porsche’s popularity and strong margins.
So, what else is going on with this iconic sports car brand?
5 Things to Know for a Porsche IPO
- Volkswagen plans to offer a minority ownership offering of about 25% of Porsche. The rest of the business is owned by a number of private entities.
- These private entities famously include the Porsche and Piech family, who hold 53% ownership in VW through their investment vehicle, Porsche Holding SE.
- Porsche and VW are likely under pressure as Tesla (NASDAQ:TSLA) continues to emphasize its new Germany-based gigafactory. The facility is located roughly an hour away from Volkswagen’s Wolfsburg headquarters.
- Some have expressed concerns over Porsche IPO preparations given the market volatility stemming from Russia’s invasion of Ukraine. In fact, VW has already paused some manufacturing in the face of material shortages caused by the conflict.
- Porsche is one of VW’s most profitable and highest-earning brands. Last year, it earned more than 16% in operating margins and offered more than $5.5 billion in profit. This makes up a large chunk of VW’s $21 billion operating profit in 2021.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
