Porsche shares stall at close after historic $72 billion trading

FRANKFURT, Sept 29 (Reuters) – Porsche AG shares got off to a bumpy start on Thursday, after Volkswagen (VOWG_p.DE) defied volatile markets to list the sports car brand at a valuation of 75 billion euros ($72 billion) in Germany’s second-biggest market debut.

The shares closed at 82.50 euros ($80.74), returning to their issue price from a session high of 86.76 euros.

Volkswagen priced Porsche AG shares at the upper end of the indicated range and raised €19.5 billion through the listing to finance the group’s electrification drive.

Key investors including the Qatar Investment Authority, T. Rowe Price, Norway’s sovereign wealth fund and Abu Dhabi claimed 40% of the share offering.

About 25% plus one common share went to the Porsche and Piech families through Porsche SE, the largest Volkswagen shareholder that now has a blocking minority in the sports car brand.

Shares hit a high of 86.76 late in the morning.

The share performance puts Porsche AG’s valuation at around €75.43bn, only slightly below former parent Volkswagen, which is worth around €80.1bn, and ahead of rivals such as Ferrari. (RACE.MI). It is the largest listing in Germany since Deutsche Telekom (DTEGn.DE) in 1996.

Shares in Porsche SE (PSHG_p.DE), Volkswagen’s largest shareholder, which now also owns a blocking minority in the sports car brand, fell 10.9% as investors turned. Volkswagen shares were down 6.9% from Thursday’s open at 128.5 euros.

Traders said some investors who bought Volkswagen and Porsche SE as an initial public offering may be reversing their positions and switching to Porsche AG, undermining Volkswagen’s goal of increasing its capitalization by showing the value of just one of its brands.

“Porsche was and is the pearl of the Volkswagen Group,” said Chris-Oliver Schickentanz, chief investment officer at fund manager Capitell. “The IPO now has made the value that the market brings to Porsche very, very transparent.”

Volkswagen Chief Executive Arno Antlitz told Reuters the listing had done its part to help finance the carmaker’s electrification drive.

Of the €19.5bn raised by the IPO, around €9.6bn will go to Volkswagen, just under a fifth of the €52bn budget needed for electrification plans, with the rest distributed to shareholders. as a special dividend.

“We are well established financially, we have strong cash flows to fund our electromobility strategy ourselves,” the CFO said.

‘NOT A DREAM ENVIRONMENT’

Volkswagen priced Porsche AG shares at the top of the range despite weaker stock markets after red-hot German inflation data and general market turmoil triggered by rising interest rates.

“This is not exactly a dream environment for an IPO today,” QC Partners wealth manager Thomas Altmann said.

Volkswagen has said that market volatility was precisely why fund managers sorely needed a stable and profitable business like Porsche AG in which to invest.

A banker involved in the transaction described Porsche’s listing as unique and predicted the market would freeze again very soon.

The listing broke records, garnering the most since Deutsche Telekom in 1996.

But Porsche is trading at a multiple of around 7.2 times its earnings, well below Ferrari’s. (RACE.MI) multiple of 40.

Companies in the region have raised $44 billion in equity capital markets deals as of Sept. 27, Refinitiv data shows, with just $4.5 billion in initial public offerings.

“There is a lot to like about the company, with its aggressive electrification plans, expected strong cash flow generation and premium brand positioning in the market,” Chi Chan, portfolio manager for European equities at Federated, told Reuters. Hermes Limited.

“However, it comes to market at a time of unprecedented turmoil and consumer confidence is falling.”

Porsche AG Chief Executive Blume, whose dual role as Volkswagen’s new head has drawn criticism from some investors, hailed the listing as a “historic moment” and dismissed the idea that he would at some point give up one of the two posts.

Up to 113,875,000 non-voting preferred shares of Porsche AG were sold in the initial public offering.

Bank of America, Citigroup, Goldman Sachs and JPMorgan served as joint global coordinators and joint bookrunners on the deal, while Mediobanca acted as financial advisor to Porsche.

($1 = 1.0218 euros)

Reporting by Victoria Waldersee, Emma-Victoria Farr, Hakan Ersen, Christoph Steitz, Alexander Huebner, Sinead Cruise, and Pamela Barbaglia; Written by Victoria Waldersee and Matthias Williams; Edited by Jane Merriman, Mark Potter and David Goodman

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