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Porsche IPO: everything you need to know and how to buy shares


MongiIG

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The Porsche IPO took place on 29 September, and you can now buy their shares with us. The Porsche listing was one of the biggest in European history.

IPOSource: Bloomberg
 

 

 Charles Archer | Financial Writer, London

How to buy Porsche shares: trading or investing

Update: the Porsche IPO is live, and you can trade or invest in Porsche shares with us now:

• Invest and own Porsche stock with share dealing
• Trade Porsche shares either long or short with spread bets and CFDs

Just search for 'Porsche AG' in our platform. Shares were priced at the top range, at €82.50, and opened at €84.

You can invest in Porsche shares from €10 commission in our share dealing account.

If you'd rather trade the stock with derivatives, you can do so commission and tax-free with spread bets, or from €10 commission with CFDs.

All this on the UK’s No.1 platform.* Learn more about buying shares with us, or open an account to get started today.

Please remember that spread betting and CFD trading is leveraged - this means that you'll only need a fraction of the total trade size to open your position, but your profit and loss will be based on the full position size. Therefore, you could stand to gain or lose money much faster than you'd expect.

How are Porsche AG shares structured?

Volkswagen floated 12.5% of Porsche in its IPO, raising around €9bn for the company.

Porsche AG was split into two halves, comprising ordinary shares and preference shares.

The ordinary shares are not listed, instead remaining with Volkswagen. Porsche AG’s financial statements remain inside Volkswagen’s results, Volkswagen retain a controlling share, and the companies continue to benefit from ‘industrial cooperation.’

However, Porsche Automobil Holding SE, which is controlled by the Porsche and Piëch families, bought 25% plus one share of the ordinary shares at a 7.5% premium.

Up to 25% of the preference shares, worth 12.5% of the company, floated in the IPO, and these are the ones available to purchase. Preference shares hold no voting rights, but holders are prioritised for dividends and also in the event the company is ever wound up.

frankfurtSource: Bloomberg

Why is the Porsche share structure so complicated?

Welcome to investing, where company A can buy shares in company B, which owns shares in company C, which owns shares in company A. Unravelling who or what ‘owns’ a company can be hard to understand with the Volkswagen-Porsche share structure more complex than most.

Ferdinand Porsche and Anton Piëch founded Porsche in 1931, while the German Labour Front founded Volkswagen in 1937. The two companies have a complex history that could take dozens of pages to cover.

But the key issue is that the descendants of Porsche and Piëch own all of the ordinary shares of Porsche SE (which is separate to Porsche AG), while some preference shares are held by institutional and private investors.

Porsche SE owns 31.4% of Volkswagen shares, but 53.3% of voting rights. The State of Lower Saxony holds 11.8% of shares and 20% of voting rights, while Qatar holding owns 10.5% of shares and 17% of the voting rights.

Therefore, the Porsche and Piëch families together control Porsche SE, which controls Volkswagen, which controls Porsche AG.

The distilled takeaway is that the original families retain a stranglehold over Porsche AG, both via Volkswagen and through direct ownership.

What is Porsche AG's business model?

Porsche AG is one of Volkswagen’s most important brands, generating $5.5 billion out of its $21 billion operating profit in 2021, despite making up only 3.5% of all deliveries. And Porsche is consistently profitable, generating $3.9 billion operating profit in 2019 and $4.2 billion in 2020.

The business model is simple; it’s effortlessly one of the top luxury automotive brands in the world. Porsche AG has six core models, including the 911 and Macan. The company produced a record 301,915 vehicles in 2021, up from 272,162 the year before. And the brand is popular worldwide, including in the Americas, Europe, and its biggest market China.

Of course, Porsche AG is facing the same headwinds as the rest of the automotive industry, including sky-high inflation and supply chain chaos exacerbated by the Russia-Ukraine war. However, its market position as a luxury good should stand it in good stead through this turbulent period; the kind of customers purchasing a Porsche are unlikely to be the same ones worrying about the rising cost of bread.

Its long-term strategy is set out in ‘Porsche Strategy 2030,’ which highlights the expected move towards EVs and even autonomous driving. One central issue will involve its transition to EVs; while 25% of the cars it sold last year were electric, the company also plans to offer ICE cars for the foreseeable future as well.

This transition will need to be carefully managed so that Porsche can maintain its industry-leading profit margins while also keeping its heritage, a unique selling point against competitors ranging from German SUV makers like BMW and Mercedes, to luxury car manufacturers like Ferrari and McLaren.

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