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Erik Kmet comments on Porsche's entry for Forbes

Published by: 18.10.2022 11:19:43

Everything falls, Porsche holds on. The carmaker made it to the stock market, the interest was enormous



The automaker Porsche has successfully entered the Frankfurt Stock Exchange. In Europe's largest IPO in the last decade, it raised around 9.4 billion euros from investors. During the first day, its shares held above the issue price while European stock markets continued to fall in turbulence triggered by record inflation, high interest rates and uncertain future prospects.


German Volkswagen, as Porsche's parent company, set the final price per share at 82.5 euros. It set the upper end of the previously announced price range due to high investor interest. This was confirmed during Thursday's trading, and the shares rose to nearly 87 euros apiece at one point, but eventually returned to the issue price level.


About 650 investors placed orders for Porsche's exchange-traded securities in the IPO. However, nearly half of them were not allocated due to high demand, Bloomberg said, citing knowledgeable sources. Indeed, the amount of shares is very limited, with the automaker freely offering only 12.5 percent of the total 911 million units.



"The financials speak in favor of investing in this brand. In recent years, we can observe a continuous increase in sales, up to thirty billion euros in 2021. Within the entire group, Porsche represents the most valuable thing Volkswagen has. In 2021, Porsche cars had a revenue share of 11.2 percent and generated profits for the entire group of 22.9 percent," commented Erik Kmet, Managing Director of the investment company K L Rock, on the IPO. Following Porsche's success, he said, other brands from Volkswagen's portfolio, such as Audi, could also head to the stock market.

While Porsche is in the plus after Thursday's trading, shares in parent Volkswagen have weakened by nearly eight percent. "In short, the market was expecting the Porsche IPO to be bombastic and during the first day of trading the stock shot up by tens of percent. Yet we see only cautious growth," says Tomas Pfeiler, portfolio manager at Cyrrus.

The shares of the Porsche SE holding did not fare well either, falling by ten percent on Thursday. The holding company is owned by the Porsche-Piech family, which also holds a majority stake in Volkswagen's ordinary shares through the company. With Porsche's stock market listing, the prominent industrialist family has gained more influence over decision-making at the eponymous carmaker. Indeed, Porsche SE now holds 25 percent of Porsche's ordinary shares.

Source: Volkswagen, Porsche SE


The luxury carmaker's market capitalization comes out at more than 75 billion euros after its stock market debut. By that metric, it is now the world's fifth-largest carmaker, bigger than Mercedes-Benz, Ford or BMW. In terms of value of shares issued, Porsche is the largest German IPO since Deutsche Telekom in 1996 and the largest in Europe since the launch of Swiss commodities giant Glencore in 2011.




On Thursday, Porsche CEO Oliver Blume expressed satisfaction with how the stock market listing went, while dismissing concerns from some investors about his dual role. After all, he heads both Porsche and the entire Volkswagen group and nothing will change that anytime soon. "This is a conscious decision on our part and there is no time horizon in which it will be reassessed," said Blume.


Porsche has raised funds on the Frankfurt Stock Exchange that it is likely to invest mainly in electric vehicles. It is moving into this sector starting with the launch of the all-electric Taycan in 2019. By 2030, it wants electric cars to account for eighty percent of sales. However, Blume on Thursday denied that the carmaker was moving towards pure electric production.


For the full article seehere.



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