Berlin (Bloomberg): Porsche AG’s chief financial officer said a share sale of Volkswagen AG’s most profitable unit could unlock value to echo Ferrari NV’s successful public offering and help the sports-car maker raise money if needed.
The maker of the 911 model could easily be valued “between 60 billion and 70 billion” euros ($81 billion, Dh254.60 billion), applying multiples for luxury-goods producers such as Ferrari, Lutz Meschke told reporters at Porsche’s development centre outside Stuttgart at an event for the brand’s first electric car, the Taycan. A partial initial public offering would add financing flexibility as the auto industry faces “the biggest transformation ever.”
Porsche isn’t pursuing plans for a listing, a decision that would be taken at group level, the company said in a written statement on Monday following the comments. At Meschke’s estimate, the market value of an independent Porsche would rival that of the entire VW group, which includes 11 other brands. Shares of the parent have lost 16 per cent this year, giving it a market capitalisation to 69.3 billion euros.
The comments show deliberations on the structural changes run deeper than VW has mapped out so far, and offer a rare insight into top management’s thinking. Meschke said he has pointed out the benefits of a listing during internal discussions, but declined to say to what degree his view is shared by VW Chief Executive Officer Herbert Diess or key stakeholders like the Porsche and Piech owner family.
“VW is one of the few carmakers whose management team is aware that actions are needed in the near-term in order to optimise the positioning of the company,” Evercore ISI analyst Arndt Ellinghorst said in note. Partial listing of VW’s units are “one obvious way through which VW can prepare itself.”
Volkswagen gained as much as 2 per cent, and was up 1.7 per cent to 142.48 euros at 11:51am in Frankfurt, compared with a 0.2 per cent decline on Germany’s blue-chip DAX Index.
CEO Diess, continuing an asset review that started two years ago, has pledged to make the world’s biggest carmaker more efficient as the industry goes through a seismic shift to make electric cars with new digital features.
The only tangible result of the review is a planned share sale of VW’s heavy-truck unit Traton AG. An effort to sell the Ducati motorbike unit stalled last year, after VW’s powerful labour unions resisted the plan amid a lack of support from the Porsche and Piech family.
VW Chief Financial Officer Frank Witter last month said the company might consider options, including a separate listing of the sports-car operations led by Porsche at some point. Such a plan wasn’t “a priority the management is working on,” he said during a Bloomberg Intelligence webinar in London.
Porsche is Volkswagen’s crown jewel and closely connected with its history. The companies were separate until Volkswagen acquired the Porsche brand in 2012 in the aftermath of a failed takeover attempt by the descendants of Ferdinand Porsche. The family, which was forced to sell the maker of the 911 sports car after financing collapsed on the deal, still controls a majority of Volkswagen’s common stock and would need to sign off on any deal to spin off Porsche.
Ferrari’s listing in 2015 not only showed the supercar maker’s own value, but also exposed weaknesses at parent Fiat Chrysler Automobiles NV’s mass-market operations, Meschke said. Fiat was able to address these more specifically after the spin off, he said. While it’s been a windfall for the Italian-American automaker, the strategy isn’t infallible. Aston Martin, another luxury sports-car maker that is seeking a Ferrari-like multiple, has slumped more than 20 per cent since its London debut this month.