Success, performance and best-in-class are what people have come to expect from Porsche, and it certainly didn’t disappoint on Thursday as the luxury automaker’s shares defied market turmoil in an IPO in success scholarship.
Its shares traded at 85.68 euros on the Frankfurt Stock Exchange, above the initial public offering (IPO) price of 82.50 euros set by German parent Volkswagen on Wednesday, and outperformed a Frankfurt market. weak. Volkswagen raised 9.4 billion euros ($9.1 billion) from the offering and plans to use the money to invest in software and electric vehicles as the global auto industry focuses on the energy transition.
Not only was the offering one of the largest IPOs in European history, but it comes against the backdrop of war in Ukraine, inflation, rising interest rates and the energy crisis. that has raised fears of recession in major economies such as Europe and the United States The strength of Porsche’s IPO shows that a strong brand with solid finances can still attract buyers despite a precarious economic climate .
What is an IPO?
An IPO means initial public offering.
Private companies have IPOs to sell shares to the public for the first time to become a publicly traded company. Private companies may do this for a variety of reasons, including raising funds to grow their business, paying off debt, or making strategic acquisitions.
How big was the Porsche IPO?
It is the third-largest deal in Europe, behind Italy’s electric utility Enel in 1999, valued at $16.6 billion, and Deutsche Telekom in 1996, valued at $12.5 billion, according to figures compiled by financial market data provider Refinitiv.
As part of Thursday’s offer, Volkswagen sold 12.5% of Porsche to investors in the form of non-voting shares. Another 12.5% plus one voting share was purchased at a premium of 7.5% by Porsche Automobil Holding SE, representing the Porsche and Piech families, descendants of automotive pioneer Ferdinand Porsche. Their holding company is also Volkswagen’s majority shareholder with 53% of voting shares.
The total proceeds from the sale of the two blocks of shares amounted to 19.5 billion euros. Of this amount, 49% will be paid out as a dividend to Volkswagen shareholders. The rest is left to VW to fund its investments in future technology.
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Who bought the Porsche IPO shares?
While it’s unclear who all the first-day buyers were, public investment funds from Qatar, Norway and Abu Dhabi took stakes, along with fund manager T. Rowe Price.
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Why is the timing of Porsche’s IPO important?
Companies usually go public when the economy is strong so they can get the highest possible price for their shares. Last year, when the stock market was near record highs and people were still feeling optimistic, 322 companies went public and raised $117.48 billion in the first three quarters, according to EY.
But this year, the mood has changed with runaway inflation, war in Ukraine, an energy crisis, rising interest rates, volatile markets and a potential global recession. The European Stoxx 600 index and the three major US equity indices are in bear markets, meaning they have all fallen at least 20% from their highs.
“The U.S. IPO market is off to its slowest start in six years,” said Rachel Gerring, head of IPOs at EY Americas. strong brands can still attract investors.
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Why were people always ready to buy Porsche?
Not only is Porsche super cool with its iconic 911, Cayenne and Boxster cars, but it has the finances to back up its success.
Last year, Porsche sold and delivered 302,000 cars at an average selling price well over $100,000. Its revenues increased by 24.5% over the previous year, with a sales return of 16%. This figure was 9.7% during the financial crisis of 2009.
Even though some worry about a global recession, Porsche is considered more recession-proof. Those who can afford a Porsche are likely able to more easily absorb rising prices and a general economic downturn.
AP contributed to this report.