Porsche-owned Volkswagen to sell Volkswagen-owned Porsche to the Public (?!)​

By Jake Rickman​

What do you need to know this week?

The German luxury brand Porsche AG is considering going public. Or at least its parent group, Volkswagen AG (VW) is thinking about floating it on the public market through an initial public offering (IPO).

According to the Financial Times, market analysts value Porsche in the neighbourhood of €80-90bn. VW hopes to raise at least €20bn through the IPO.

The FT reports that half of the shares offered to the public will have voting rights attached, which would entitle members of the public to weigh in on how the company is run.

VW will still maintain a significant stake in Porsche if the IPO goes ahead.

Why is this important for your interviews?

For starters, this is an exciting potential IPO to keep your eye on in the future: some analysts have pegged that the market value of Porsche AG following a successful listing could be as much as €200bn.

However, the story behind Porsche’s potential IPO is less straightforward than many other IPOs.

In 2007, Porsche SE was created by the original family owners of the luxury car brand as a holding company over the Porsche Group (whose legal name became Porsche AG). In 2009, Porsche SE acquired a little over half of the shares in Volkswagen AG. In 2009, Volkswagen’s management secured 100% management rights over the production and operation of the entire Porsche automotive group.

In effect, the original management of Porsche gave up direct control in their company while becoming the ultimate owner of two of Germany’s biggest auto manufacturers (having later acquired Audi, to boot).

Ironically, Volkswagen AG later acquired all of Porsche AG, even though Porsche SE is the ultimate owner of both brands.

If this sounds a bit confusing, this is a great way to acquaint yourself with how large corporate groups are organised. It is not uncommon for what we think of as a single large company to in fact contain hundreds of individual entities arranged in what is called a “corporate group”.

How is this topic relevant to law firms?

For some transactional practice groups like private equity, corporate, restructuring, and funds teams, trainees can spend a lot of time preparing “structure charts”, which visually display how corporate groups like Porsche SE/Volkswagen/Porsche AG are related.

You can think of them as corporate family trees. They can often get quite complex, especially where one entity is part publicly owned and part of a much larger group.

Structure charts are immensely helpful for more senior lawyers and their clients to acquaint themselves with potential deal targets because creating a structure chart can be a lot more illuminating than trying to simply say: “Porsche AG is 100% owned by Volkswagen AG, which is mostly owned by Porsche SE, which is (get this!) itself 50% publicly traded.”


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