VW Puts Porsche on the Road to IPO

Volkswagen and its key shareholder have drafted a preliminary agreement to list Porsche on the public markets in what could be one of the world’s biggest market debuts.

According to a Reuters report Tuesday (Feb. 22), analysts estimate Porsche could be valued at up to $102 billion in an initial public offering (IPO), versus parent company Volkswagen’s current market value of $131 billion.

Reuters said both Volkswagen and Porsche SE declined to comment on details of a possible IPO other than to say a final decision had not been made.

Read more: Volkswagen Considering Taking Porsche Public

As we noted in December, rumors about a Porsche IPO have circulated for some time, always centered around the idea that the listing would break records if it happened. When rumblings resurfaced last year, sources said the complicated ownership structure of the car company was slowing the process.

The IPO could mean a shift in the balance of power at the European auto giant, which formed after Porsche failed to take over VW in 2009 and was instead acquired by Volkswagen. That deal made the Porsche and Piech families Volkswagen’s most influential investors through their holding company, Porsche SE, which owns 31.4% of Volkswagen controls 53% of the carmaker’s voting rights.

The sources said the two families may choose to reduce their stake in Volkswagen to buy into the IPO, a move that would loosen their grip on VM in favor of direct ownership of the 89-year-old sports car brand.

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One of the sources said Volkswagen CEO Herbert Diess showed a basic outline of the IPO to representatives of the supervisory board earlier this week in the wake discussions on the matter over last weekend.

Sources familiar with the mater tell Reuters Volkswagen could issue an equal number of Porsche AG ordinary and preference shares in the IPO and could pay a special dividend to its owners to drive support for the deal.