Dhe return of Porsche AG to the stock market is considered the second largest IPO in German history. If you add up the entire transaction, it even exceeds Telekom’s record volume of 1996 of a good 10 billion euros. Because the initial listing of the non-voting preferred shares of Porsche AG last Thursday on the Frankfurt Stock Exchange was only the public part of the transaction for Volkswagen with issue proceeds of 9.4 billion euros. However, this is linked to a second sale of shares that will not be processed via the stock exchange. This was now completed on Tuesday: Porsche Automobil Holding SE bought 17.5 percent plus one share of Porsche ordinary shares from Volkswagen for a good 7 billion euros, as the company announced on Tuesday. A second part of a further 7.5 percent will follow in January for a good 3 billion, so that the Porsche SE then holds 25 percent plus one share of the Porsche ordinary shares and thus has a blocking minority.
The ordinary shares of Porsche SE are wholly owned by the Porsche and Piëch families. With the transaction that has now taken place, the families now have direct access to “their” company again for the first time after losing Porsche independence in 2008/2009. is the Chairman of the Supervisory Board of Porsche SE Wolfgang Porsche, his deputy is Hans Michel Piëch. The non-voting preferred shares of Porsche SE are listed and have been included in the Dax for a good year.
The SE’s most important holding is the majority of voting rights in Volkswagen AG (53.3 percent). Now comes the purchase of shares in the Porsche AG a second major contribution to it. The previously debt-free Porsche SE is initially financing the 7.1 billion euros to be raised in the first step via bank loans. “We have agreed on tranches of up to five years, with maximum flexibility and unscheduled repayment options,” says Johannes Lattwein, CFO of Porsche SE, who, together with Porsche SE CEO Hans Dieter Pötsch, conducted the negotiations to acquire the Porsche ordinary shares with Volkswagen Has.
Promissory note and bond planned
At the end of this year or the beginning of next year, some of the loans are to be replaced by issuing a promissory note on the capital market. Bonds could also be placed on the capital market in the future. “We want to use this to finance ourselves more independently of banks,” says Lattwein. The loan agreement was made with the American JP Morgan, Deutsche Bank, the Spanish Banco Santander, the French Credit Agricole, the Dutch ING, and the Italian Unicredit. The later going on the capital market with promissory notes and bonds should also be accompanied by these banks, among others.
Porsche Holding has not yet had a credit rating and will not necessarily have one in the future either. “From the point of view of the capital market, Porsche SE is in a strong position, so a rating is not absolutely necessary. But we’re keeping this option open,” says Lattwein. According to reports, the loans to Porsche SE were granted without collateral.
The debts are to be repaid from the dividend income of Porsche SE. She herself has only a few dozen employees and mainly manages the VW shareholding and now the Porsche stake, and also invests in several start-ups in the mobility and industrial technology sectors. “It has been clearly agreed with the financing partners that we can continue to expand the portfolio with significant amounts in the future,” says Lattwein.
Shareholders should continue to receive dividends
This year, Porsche SE received around 1.2 billion euros in dividends before taxes from Volkswagen. Porsche SE itself intends to continue paying dividends and considers the current level of dividends to be appropriate, even after the most recent transaction. “The transaction is designed in such a way that we can continue to make our dividend payments and use the income from our investments to repay the loans,” says Lattwein. Shareholdings in VW ordinary shares would not have to be sold for this. However, it is possible to use the 2.7 million preferred shares in VW currently held by Porsche SE (current market value 351 million euros) to repay the liabilities. “However, given the current share prices, that is not expedient,” says Lattwein.
After the Porsche IPO on Thursday, the share prices of VW and Porsche SE fell significantly, while the share certificates of Porsche AG were kept just above the issue price of 82.50 euros. “The extent of the price drop was surprising,” says Lattwein, who considers the shares in his Porsche SE to be significantly undervalued. The VW share alone is currently worth 27 billion euros, but Porsche SE is only worth 9 billion euros in the preferred shares listed on the Dax and together with the unlisted common shares it is roughly estimated at 18 billion euros. This leaves a gap of almost 10 billion euros.
Some of this can be explained by legal disputes at Porsche SE. Lawsuits related to Porsche’s attempt to take over the Volkswagen Group in 2008 are still pending. On Friday, however, the cartel senate of the Celle Higher Regional Court, in the most important case, rejected the damage claimed by the plaintiffs of around 5 billion euros as unfounded. A legal complaint at the Federal Court of Justice is possible.