Volkswagen eyes Porsche stock float for electric push

The tentative plan is estimated to value the sportscar brand at as much as €85bn

Volkswagen is considering floating its Porsche luxury car brand to help fund the group's push into electric cars to rival Tesla.

Volkswagen is preparing a stock market flotation of Porsche, seeking a listing of its most profitable asset to help boost the parent’s valuation and fund the push into electric vehicles.

VW’s preferred shares surged as much as 10% after the announcement on a possible IPO outline between the carmaker and Porsche Automobil Holding, a company controlled by the billionaire Porsche and Piech-owner family.

The tentative plan, which is estimated to value the sportscar brand at as much as €85bn, would reverse a tumultuous takeover of Porsche more than a decade ago and signals the extent of the upheaval sweeping the industry.

Europe’s biggest carmaker has been pushing for years to adopt a less centralised corporate structure to become more nimble and step up its challenge to Tesla. Success has been modest. The IPO of Traton, VW’s truckmaking unit, fizzled amid internal ructions and a limited free float, while a plan to separate the Lamborghini supercar and Ducati motorcycle brands didn’t progress.

Volkswagen’s management and supervisory boards still have to sign off on the framework agreement with Porsche and a final decision hasn’t yet been made, the carmaker said.

While VW chief executive Herbert Diess appeared to pour cold water on a Porsche listing about a year ago, he’s under pressure to start catching up to Tesla. After a well-received presentation of VW’s accelerated electric vehicle plans in March last year and successful models like the Porsche Taycan, efforts have sputtered and its market valuation remains dwarfed by the US EV leader.

A plan to list Porsche chimes with deep restructurings in train elsewhere among traditional carmakers and suppliers. In the latest example, Ford is looking at ways to separate its electric vehicle operation from its century-old legacy business to unlock value.

Separating Porsche could offer a new funding option for the group. VW largely relies on generating enough cash on its own or issue bonds, because its convoluted shareholder structure limits options to raise fresh equity capital like Tesla has done, without diluting shareholdings of key stakeholders that control about 90% of VW’s voting stock.

Porsche is the most iconic brand in VW’s stable and highly profitable, among other nameplates like Audi, Skoda and Bentley.

“I think Porsche could be an interesting part for thinking about an IPO,” Porsche CEO Oliver Blume said last year, cautioning that a final decision won’t be his to make.

-Bloomberg