Germany Automaker Porsche AG is going Public (IPO) – Know the company with actionable insights

Porsche AG IPO
Porsche AG

Porsche AG IPO Company Overview:

Porsche AG IPO – German Automaker Porsche AG is planning to launch an Initial Public Offering later this year. “We want to be ready for the IPO at the end of September, or early October, the earlier the better.” Porsche finance chief Lutz Meschke told Italian daily Il Sole 24 Ore.

Huge demand for the listing of Porsche AG IPO which is taking place on Sept. 29 at the Frankfurt Stock Exchange. Retail investors are participating strongly in the Porsche IPO process. The subscription period for private and institutional investors will run till September 28. As of now the demand exceeds the full deal size.

Institutional investors are showing significant interest in this Iconic car manufacturer. Qatar Investment Authority is buying 4.99% of the offering, Abu Dhabi’s ADQ is investing 350 million euros while T. Rowe Price and Norway’s sovereign wealth fund are investing 750 million euros each.

Volkswagen is planning to fund to achieve its goal of electric Vehicles. Total proceeds from the Porsche AG listing will be 18.1-19.5 billion euros. This will help Volkswagen fund its electrification drive.

Headquartered in Stuttgart, Baden-Württemberg, Germany, the company was founded by Ferry Porsche. Porsche AG was incorporated as “Dr. Ing. h. c. F. Porsche GmbH” in 1931.  

  • Porsche AG is a leading German automobile manufacturer specializing in high-performance sports cars, SUVs, and sedans.
  • The German Automaker Porsche AG carries an iconic brand and heritage with a long history of being a successful brand globally. Building luxury sports cars for over 75 years.
  • The vehicles of the company are well equipped in design, function, performance, and sustainability points.
  • One of the most valuable luxury brands worldwide since 2017 among major luxury and automotive players.
  • Consistently coming up with new models with higher production and portfolio expansion over the years.
  • Received Automotive-INNOVATIONS-Award “Most Innovative Car Globally” in 2020 declared by the Center of Automotive Management.
  • Leading the transition of vehicles from ICE (Internal Combustion Engines) to BEV (Battery Electric Vehicle). By 2030, the company has targeted to deliver 80% of the total vehicle in BEV.

Porsche AG focuses on premium vehicles

The company manufactures high-performance sports cars, SUVs, sedan, Vehicle accessories and equipment. The products and services of the company are broadly categorized below based on the revenue segment.

  • Vehicles – brands like 911 sports classic, Taycan, Panamera, Macan, Cayenne, and planning for high-performance BEV with world-class luxury.
  • Genuine parts or equipment
  • Used vehicles and 3P products
  • Rental and leasing business
  • Financial services

Porsche AG Founders and Leadership team

The company is run by an experienced and qualified senior management team with significant experience in the business. Porsche AG is a part of the Volkswagen AG group.

Oliver Blume, Chairman of the Board of Management of Volkswagen AG, and Dr. Ing. h.c. F. Porsche AG and also CEO of Porsche AG. He has been with the group since 1994. Blume holds a Ph.D. in mechanical engineering.

Before this assignment, Blume was in the production planning of SEAT for five years. He also worked another five years at the Volkswagen brand. In 2013, he was appointed to the Porsche Executive Board. Since 1 October 2015 Blume has served as CEO of Volkswagen subsidiary Porsche. Blume was instrumental in launching the Taycan and during the first six months of 2021, almost 20,000 units were sold.

Lutz Meschke is the Deputy Chairman and Member of the Executive Board of Finance and IT at Porsche AG. He is also a Member of the Executive Board of Investment Management at Porsche Automobil Holding SE. Lutz has been associated with the company since 2004. Before this assignment, he worked with “Hugo boss” as Head of Group Consolidation for 2 years and with KPMG for over 9 years. He holds a Business Administration degree from the University of Cologne.

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Porsche AG Revenue and profits

The German Automaker Porsche AG engaged in both manufacturers of vehicles and accessories. The major part of the revenue, ~76%, comes from the Vehicles segment. The company is also engaged in the reselling of used vehicles. Porsche AG occupied a unique position in the luxury automotive segment. Group revenue has been increasing over the years despite Covid challenges.

The total income has increased from Euro 28.5 billion in 2019 to Euro 33.1 billion in 2021. The major part of the revenue comes from Europe and China. Approximately, Euro 10.3 billion in 2021, comes from China. Western restrictions on China and the economic slowdown will have a significant impact on the company’s performance. Further, Europe contributes Euro 10.6 billion to the Company’s revenue. An economic slowdown in the region will also have an impact on the company.

However, profit has increased from INR 128.00 million in FY 2019 to INR 398.39 million in FY 2021 which is a growth of CAGR of 76.42% between the Fiscals 2019 and 2021.

Revenue by type of products (Segment)
in € bn
Genuine parts1.51.51.5
Used vehicles and 3P products1.02.42.7
Rental and leasing business2.41.21.2
Financial Services interest and similar income0.20.20.2
Hedges sales revenue(0.3)(0.3)(0.3)
Other revenue1.82.12.3
Group Revenue28.528.733.1

Porsche AG has been registering strong returns on equity over the years from 16.7% in 2019 to 21.2% in 2021. Return on Assets increased from 2.6% in 2019 to 3.3% in 2021. EBITDA has increased from Euro 6.3 billion in 2019 to Euro 7.4 billion in 2021. Automotive net cash flow has also increased from Euro 1.5 billion in 2019 to Euro 3.7 billion in 2021. PAT increased from Euro ~2.8 billion in 2019 to Euro ~4.1billion in 2021.

The German Automaker Porsche AG delivered ~300K vehicles in 2021. Out of the total vehicle manufactured ~32% were delivered to China market, ~29% to Europe, and ~ 26% to North America.

Revenue by geography in € bn201920202021
Germany3.8  3.74.0
Europe without Germany5.9 5.76.7
North America7.7 7.68.7
China (Including Hongkong)8.4 8.710.3
Rest of World3.03.23.7
Hedges sales revenue(0.3)(0.3)(0.3)
Group Revenue28.5 28.733.1

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Porsche AG IPO: What you need to know?

Porsche AG IPO will be the largest ever listed in Germany. Germany is the second largest economy in the world and the largest in Europe. Porsche AG is planning to float an initial public offering of up to 25% of non-voting preferential shares.  The Preferred Shares are planned to be listed on the Regulated Market of the Frankfurt Stock Exchange. The company is pushing to come up with Porsche IPO by October 2022 and the process may be completed by the end of this year. If the current market uncertainty remains, the Porsche IPO launch date may be delayed.

In the process of Porsche AG IPO, the total shares of Porsche AG will be divided into two parts comprising preference shares (50%) and ordinary shares (50%). Ordinary shares will remain with its promoter Volkswagen and will not be listed. Volkswagen will have controlling authority over the company. The Porsche family will have 25% of the preference shares and one of the ordinary shares.

The remaining 25% of the preference shares, which are worth 12.5% of the Porsche AG Company, will be floated in the IPO process. There will be no voting rights for these preference shares. However, preference shareholders are prioritized for dividends and also in the event the company is ever wound up. This will attract retail investors to participate in the Porsche IPO process.

The IPO would comprise public offerings in Germany, Austria, France, Italy, Spain, and Switzerland as well as private placements to institutional investors. “This is a historic moment for Porsche. We believe an IPO would open up a new chapter for us with increased independence as one of the world’s most successful sports car manufacturers.” Said Porsche CEO Oliver Blume

IPO Porsche AG: do we invest?

  • Porsche AG listing is going to be a big event in Europe. Important factors need to be understood before investing.
    • Porsches AG has been one of the top luxury automotive brands in the world and is maintaining its Iconic brand name for decades. This will attract retail investors to own a part of the company.
    • Though the price of each equity share is not clear yet, due to the slowdown in the European economy, the price of each equity share might be reasonable and attractive to the retail investor.
    • The valuation of the company is approximately US$ 100 billion. Planned listing shares will be worth US$ 12.5 billion assuming that the company is listing 12.5% of the equity of the total company.
    • The company wants to move toward EV vehicles aggressively and requires funds to achieve that.
    • Porsche AG intends to target a dividend payout ratio of ~50 percent of the net proceeds to shareholders. The rest of the net proceeds will be utilized for business expansion.
    • The volatility in the market may remain for some time now due to high inflation, supply-chain chaos, and the slowdown in China. However, a retail investor can invest in the company for the long-term gain.
    • In case the price of each equity share is lower or reasonable, this will be a golden chance to own a part of one of the most famous, and profitable car manufacturers in the world.