Porsche AG to go ahead with IPO​

By Jake Rickman​

What do you need to know this week?

Porsche AG — the German luxury car manufacturer — has moved ahead with plans to offer shares to the public at a targeted range of €76.50 – €82.50 per share. In total, the company’s owners, Volkswagen AG, hope to raise between €8.71bn – €9.39 in cash from the proceeds of the listing.

Porsche AG published the prospectus on Monday, 19 September, which values the company between €70bn – €75bn. The initial public offering (IPO) is a partial listing. This means that Volkswagen will retain a considerable stake in the company, with the public owning approximately 12.5% of the shares in the company.

The shares will be non-voting preference shares, which entitles shareholders to the right of first dividend payments ahead of non-preference shareholders. Certain institutional investors including the Qatar Investment Authority and T. Rowe Price have made conditional subscription offers worth in aggregate up to €3.38bn.

Why is this important for your interviews?

We reported a few months ago on the corporate structure behind Porsche AG, when its parent company announced it was considering floating shares to the public. This latest development is topical for two reasons:

First, despite a couple of high-profile recent IPO announcements, analysts remain pessimistic about the near-term prospects of public market activities. We might therefore question how to evaluate Porsche’s listing in light of this pessimism. That is, is the pessimism wholly justified?

Second, what are the key business drivers behind Porsche’s relative success compared to other automakers like Aston Martin, whose financial difficulties we examined last week. Why, for instance, is Porsche in a position to launch an IPO whereas Aston Martin is raising cash through a rights offering?

Both lines of enquiry might be fruitful topics to raise in an interview setting as a way to demonstrate to your interviewers the extent of your commercial awareness.

How is this topic relevant to law firms?

While the listing prospectus does not indicate which firms are advising Porsche AG and the special purpose vehicle (SPV) created to structure the IPO, Magic Circle firm Freshfields Bruckhaus Deringer reported it was advising the various group entities in February 2022 on matters related to the floatation.

Given Freshfields’ eminence in the German-speaking market following its merger in the early 2000s with the German-Austrian firm Bruckhaus Westrick Heller Löber and German firm Deringer Tessin Hermann & Sedemund, they are certainly well-placed to advise one of Germany’s most prestigious brands.