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Summary
- German automaker Volkswagen AG is considering plans to separately list its luxury sports car brand Porsche to raise capital for its shift in manufacturing electric vehicles.
- The company plans to list up to 25 per cent of its Porsche AG stake, which is estimated to have a valuation between EUR 20 billion and 25 billion (US $24 to $30 billion).
- The potential Porsche listing could be floated in 2022, according to some media reports.
Germany-based automobile giant Volkswagen AG (DE: VOW) is reportedly considering listing its luxury sports car brand Porsche separately in a bid to raise capital for its electric car business and make technological investments.
According to media reports, the company plans to list up to 25 per cent of its Porsche AG stake, which is estimated to have a valuation between EUR 20 billion to 25 billion (US $24 to US $30 billion).
Low valuation
The legacy automobile firm’s CEO Herbert Diess has long called for the company’s need to revamp its business and raise its valuation, which is much lower than US-based EV company Tesla (NASDAQ:TSLA). The IPO can potentially solve this challenge. It is speculated to be floated in 2022, the Bloomberg reported.
Want to know more? Do read: How is EV battle going; Is Volkswagen catching up with Tesla (NASDAQ:TSLA)?
The company has long been surrounded by speculation of a separate listing. In 2018, financial head Lutz Meschke said that the sports car brand could have a valuation of up to EUR 70 billion if listed separately.
Meschke had also added that other luxury car brands such as Ferrari (BIT: RACE) and Aston Martin (LON:AML) had benefited from such listings, thus prompting Porsche to consider similar options to make itself more attractive.
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Rising competition
The auto sector is going through many transitions. Earlier this month, Car manufacturer Daimler’s (ETR: DAI) announced that it would spin off its truck business to boost its valuations. Daimler’s valuation rose to US $ 86 billion, following the spinoff. However, this is about the same as EV car company Nio Inc (NYSE:NIO), which generated only about 10 per cent of the car giant’s revenues last year. This valuation discrepancy is due to legacy car companies being bogged down with large combustion engine-based manufacturing plants. Thus, such production models are not able to match the more nimble EV start-ups.
Several car companies have recently forayed into developing autonomous and electric cars, such as legacy automaker Ford’s (NYSE:F) recent EV development announcement. Moreover, the recent merger of car manufacturer Fiat Chrysler and French car company Peugeot to form the world's fourth-biggest car manufacturer Stellantis (BIT: STLA), further adds to the competition.
Want to know more? Do read: Ford Motor focuses on EVs; says semiconductor chip shortage to hit Q1 production
Stock market reaction
The car company’s (DE: VOW) stock prices closed trading at EUR 187.60, up by 3.02 per cent as of 18 February following the news.
