[Asia Economy Reporter Park Byung-hee] Volkswagen is reportedly considering listing Porsche next year, Bloomberg News reported on the 18th (local time), citing sources.
The source said Volkswagen is seeking advice on what benefits it could gain from Porsche's initial public offering (IPO) and that Volkswagen plans to use the funds raised from the Porsche IPO for mergers and acquisitions (M&A) or technology investments.
Volkswagen's consideration of a Porsche IPO appears to be a strategic move in preparation for the electric vehicle era. The stock price of U.S. electric vehicle maker Tesla surged eightfold last year, and major automakers such as General Motors (GM) and Ford have recently announced their transformations into electric vehicle companies. Porsche also plans to convert all models except the 911 to electric vehicles by 2030.
Volkswagen CEO Herbert Diess expressed surprise last month in an interview with Bloomberg at how electric vehicle companies, including Tesla, are raising huge amounts of money in the market. Currently, Tesla's market capitalization is $757 billion, about seven times higher than Volkswagen's €90 billion ($109 billion).
Considering Porsche's value, Volkswagen is expected to secure substantial funds through the IPO.
Porsche sold 181,000 cars up to the third quarter last year, achieving sales of €17.5 billion and operating profit of €1.9 billion. In contrast, Volkswagen sold 6.3 million cars up to the third quarter, with sales of €155.5 billion and operating profit of €1.7 billion.
Michael Dean, an analyst at Bloomberg Intelligence, estimated that if Porsche goes public, its market capitalization would be larger than Volkswagen's, estimating Porsche's market cap at €110 billion. Dean said Porsche would be an attractive stock with Tesla's stock price and Ferrari's operating profit margin, and that the Porsche IPO would be a bold solution to significantly enhance shareholder value.
Arndt Ellinghorst, an analyst at Bernstein Research, estimated that the value of Porsche's electric vehicle division, Taycan, alone could reach €40 billion.
Even if Volkswagen proceeds with the Porsche IPO, it is expected to retain a significant portion of Porsche's shares. The Wall Street Journal reported that Volkswagen is considering listing up to 25% of Porsche's shares. The WSJ added that the listing review is still in its early stages and that the IPO may not take place next year.
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