Volkswagen Sets Porsche IPO Price at Upper Limit of 82.50 Euros One Day Before Listing

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 28th (local time), one day before the listing of Porsche, the sports car brand affiliated with German Volkswagen Group, Volkswagen set the public offering price at the top end of the previously hoped range, 82.50 euros per share (approximately 114,000 KRW). Despite the listing taking place amid a global market freeze due to recession concerns, setting the public offering price at the highest level is seen as a demonstration of confidence in the business.

According to Bloomberg and others, Volkswagen's Supervisory Board and Executive Committee decided at a meeting on the same day to set Porsche's public offering price at 82.50 euros per share, the top end of the hoped range (76.50?82.50 euros). The total number of Porsche shares is 911 million, commemorating Porsche's legendary sports car, the 'Porsche 911.' Accordingly, Porsche's market capitalization is set at 75 billion euros.

Porsche will be listed on the Frankfurt market in Germany on the 29th. This is the largest in Europe since Swiss mining company Glencore raised $10 billion through its listing on the London Stock Exchange in 2011. The Wall Street Journal (WSJ) expects that with Porsche's listing, it will join the ranks of the world's fifth-largest automobile manufacturers by market value, following its parent company Volkswagen.

This Porsche listing takes place at a time when the market is frozen due to soaring inflation, interest rate hikes, and spreading recession concerns. The market expects Porsche's listing to proceed relatively smoothly as the company has posted strong performance. Porsche recorded sales of 33.1 billion euros last year. In July, it also forecasted sales of 39 billion euros this year, with a profit margin of up to 18%.

Philip Houshous, an analyst at Jefferies, said, "Being able to conduct an IPO in such a difficult market situation shows the attractiveness of this business," adding, "Porsche is a mature and well-known business that does not need to be listed. It is very impressive that they can secure funds by offering it to the market in its complete form."

Volkswagen, which holds 75% of Porsche's shares, plans to raise up to 19.5 billion euros through this listing. Half of the proceeds will be returned to shareholders as a special dividend, and the remainder will be used for funding new technologies such as battery development for electric vehicles and autonomous driving.