Volkswagen(VLKAF) will price preferred shares in the flotation of Porsche AG at 76.50 euros to 82.50 euros per share, the carmaker said, translating into a valuation of 70 billion to 75 billion euros.
At the upper end of the range, first reported by Reuters, it would become Europe’s third largest IPO on record, according to Refinitiv data. Trading will begin on the Frankfurt Stock Exchange on Sept. 29, Volkswagen said.
As part of the listing, 911 million Porsche AG shares will be divided into 455.5 million preferred shares and 455.5 million ordinary shares. Up to 113,875,000 preferred shares, carrying no voting rights, will be placed with investors over the course of the IPO.
The sovereign wealth funds of Qatar, Abu Dhabi and Norway as well as mutual fund company T. Rowe Price will subscribe up to 3.68 billion euros worth of preferred shares as cornerstone investors, at the upper end of the valuation, Volkswagen said.
“We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors,” Volkswagen Chief Financial Officer and Chief Operating Officer Arno Antlitz said.
In line with Volkswagen’s agreement earlier in September with its largest shareholder Porsche SE, 25% plus one ordinary share in the sportscar brand, which do carry voting rights, will go to Porsche SE at the price of the preferred shares plus a 7.5% premium.
Porsche SE, the holding firm controlled by the Porsche and Piech families, will finance the acquisition of the ordinary shares with debt capital of up to 7.9 billion euros, it said in a separate statement.
Total proceeds from the sale will be 18.1 billion to 19.5 billion euros. If the IPO goes ahead, Volkswagen will call an extraordinary shareholder meeting in December where it will propose to pay 49% of total proceeds to shareholders in early 2023 as a special dividend.
A stock exchange prospectus is expected to be published on Monday, after which institutional and private investors can subscribe to Porsche shares.
The name of the car manufacturer Porsche is attached to the curved facade of the newly built Porsche Centre in Magdeburg.
Stephan Schulz | picture alliance via Getty Images
Volkswagen will price preferred shares in the planned flotation of Porsche AG at 76.50 euros to 82.50 euros ($76.61 to $82.62) per share, the carmaker said on Sunday, generating proceeds of between 8.7 to 9.4 billion euros.
The price range, which translates into a valuation of 70-75 billion euros, would make it Germany’s second biggest IPO in history and, at the upper end of the valuation, Europe’s third largest on record, according to Refinitiv data.
Trading will begin on Sept. 29, the carmaker said.
A total of up to 113,875,000 preferred shares from Volkswagen AG – which do not carry voting rights – will be placed with investors over the course of the IPO.
In line with an agreement struck earlier in September between Volkswagen AG and its largest shareholder Porsche SE, 25% plus one ordinary shares in the sportscar brand, which do carry voting rights, will go to Porsche SE at the price of the preferred shares plus a 7.5% premium.
That brings the total proceeds to between 9.36 billion to 10.10 billion euros, the statement said.
A stock exchange prospectus is expected to be published on Monday, after which institutional and private investors can subscribe to Porsche shares.
As part of the listing, 911 million Porsche AG shares will be divided into 455.5 million preferred shares and 455.5 million ordinary shares. Only the preferred shares will be listed.
Top investment banker Rick Sherlund of Bank of America sees a wave of struggling companies putting themselves up for sale at cheaper prices due to the economic downturn.
related investing news
Ray Dalio says higher interest rates to squash inflation could tank stock prices by 20%
“You do need to see greater capitulation,” the firm’s vice chair of technology investment banking told CNBC’s “Fast Money” on Thursday. “Companies will have their valuation expectations soften, and that will combine with more fully functional financial markets. I think it will accelerate the pace of M&A [mergers and acquisitions].”
His broad analysis comes on the heels of Adobe’s $20 billion dollar deal Thursday for design platform Figma. Adobe failed to generate excitement on Wall Street. Its shares plunged 17% due to questions about the price tag.
Sherlund, a former software analyst who hit No. 1 on Institutional Investor’s all-star analyst list 17 times in a row, worked at Goldman Sachs during the 2000 tech bubble. He believes the Street is now in the beginning stages of a difficult market cycle.
“You need to get through third quarter earnings reports to feel confident that maybe the bad news is largely out into the market because companies will be reporting lengthening of sales cycles,” he said. “We need to reset expectations for 2023.”
Read more about tech and crypto from CNBC Pro
Sherlund and his team are very active in the M&A market.
“You have private equity with a boatload of cash, and they need functioning debt markets for leverage to do deals,” Sherlund noted. “They’re very eager and actively looking at this sector … It suggests that [for] M&A, in absence of an IPO market, we’re just going to see a lot more consolidation coming in the sector.”
He notes the IPO has been hurt in connection with rising interest rate headwinds and inflation.
“[The IPO market] is not open. But when the window does open back up, you are going to see a lot of companies going public,” he added.
The long-term prospects for software are extremely attractive, according to Sherlund.
“You’ve got to be very bullish on the long-term fundamentals of the sector,” Sherlund said. “Every company is becoming a digital enterprise.”
MILAN – Porsche AG wants to be ready for a planned stock market listing as early as possible, an executive at the luxury sportscar unit of Volkswagen was quoted as saying on Saturday, as investors showed huge interest in the initial public offering (IPO).
“We welcome a strong interest in our company and we are confident despite challenging market conditions”, Porsche finance chief Lutz Meschke told Italian daily Il Sole 24 Ore.
“We want to be ready for the IPO at the end of September, early October,” Meschke added. “The earlier the better.”
Porsche published a so-called intention to float on Monday for a share sale to be launched in late September or early October and completed by year end, but added the listing and timing were “subject to further capital market developments”.
In total, shares amounting to about 12.5% of Porsche’s total capital will be listed. Investors estimate Porsche’s total value could be up to 85 billion euros.
(Reporting by Elvira Pollina and Victoria Waldersee; Editing by David Holmes)
Employees of German car manufacturer Porsche install the windshield of a Porsche 911 at the Porsche factory in Stuttgart-Zuffenhausen, Germany, February 19, 2019. Picture taken February 19, 2019. REUTERS/Ralph Orlowski/File Photo
Register now for FREE unlimited access to Reuters.com
MILAN, Sept 10 (Reuters) – Porsche AG wants to be ready for a planned stock market listing as early as possible, an executive at the luxury sportscar unit of Volkswagen (VOWG_p.DE) was quoted as saying on Saturday, as investors showed huge interest in the initial public offering (IPO).
“We welcome a strong interest in our company and we are confident despite challenging market conditions”, Porsche finance chief Lutz Meschke told Italian daily Il Sole 24 Ore.
“We want to be ready for the IPO at the end of September, early October,” Meschke added. “The earlier the better.”
Porsche published a so-called intention to float on Monday for a share sale to be launched in late September or early October and completed by year end, but added the listing and timing were “subject to further capital market developments”.
In total, shares amounting to about 12.5% of Porsche’s total capital will be listed. Investors estimate Porsche’s total value could be up to 85 billion euros. read more
Register now for FREE unlimited access to Reuters.com
Reporting by Elvira Pollina and Victoria Waldersee; Editing by David Holmes
Our Standards: The Thomson Reuters Trust Principles.
Volkswagen(VLKAF) first started looking at spinning off the high-performance automaker in February, just as Russia’s invasion of Ukraine jolted investors.
In a statement late on Monday, Volkswagen said it had decided to press ahead with the initial public offering later this month or in early October, “subject to further capital market developments.”
Up to 12.5% of Porsche will be offered to investors in the form of preference shares,with nearly half of the proceeds “of a successful IPO” to be distributed to Volkswagen shareholders in the form of a special dividend, the company added.
Volkswagen has also said it plans to use the proceeds from the IPO to bolster its efforts to build more electric vehicles. The company intends to dole out €89 billion ($88.4 billion) over the next five years on developing EVs, about half of its planned spending in that time. It wants EVs to represent a quarter of sales by the end of 2026.
Reuters has reported the initial public offering could value Porsche as high as €85 billion ($84.4 billion), and that Volkswagen could raise more than €10.5 billion ($10.4 billion). That would set it up to be one of Europe’s biggest IPOs ever, according to data from Dealogic.
The blockbuster listing will go ahead even as recession fears, soaring energy prices in Europe and uncertainty about plans by central banks to slow inflation roil markets. That’s slowed most dealmaking to a crawl, as companies wait for more certainty before pursuing mergers or public offerings.
A leadership shakeup at Volkswagen has added to uncertainty over the listing. Oliver Blume took the reins as chief executive of the German auto giant this month after Herbert Diess was ousted from the job in July.
Attendees look at the 2022 Porsche 718 Cayman GT4 RS during the 2021 LA Auto Show in Los Angeles, California, U.S. November 17, 2021. REUTERS/Ringo Chiu
Register now for FREE unlimited access to Reuters.com
HAMBURG/FRANKFURT, Sept 5 (Reuters) – Volkswagen (VOWG_p.DE) on Monday announced its intention to float sportscar brand Porsche, triggering what could become one of the world’s largest listings even as markets jitter over record inflation and a Russia-Europe energy standoff.
The carmaker published a so-called intention to float for an initial public offering in late September or early October to be completed by the end of the year.
The move was announced after VW’s supervisory board gave the go-ahead late on Monday. read more
Investors expect a valuation between 60-85 billion euros. At the high end of estimates, the IPO could be the largest in German history and the biggest in Europe since 1999, Refinitiv data showed.
“The Board of Management of Volkswagen AG today resolved, with the consent of the Supervisory Board, to pursue an initial public offering,” Volkswagen said.
Register now for FREE unlimited access to Reuters.com
Reporting by Paul Carrel, Victoria Waldersee, Jan Schwartz; Emma-Victoria Farr, Christoph Steitz, Ilona Wissenbach in Frankfurt
Additional writing by Tom Sims; Editing by Matthew Lewis and Alistair Bell
Our Standards: The Thomson Reuters Trust Principles.
Emma-Victoria Farr
Thomson Reuters
Reports on European M&A with previous experience at Mergermarket, Bloomberg The Daily Telegraph and Deutsche Presse Agentur.
Bill Ackman during a Bloomberg Television interview on 1 November 2017. Billionaire investor William Ackman, who had raised $4 billion in the biggest-ever special purpose acquisition company (SPAC), told investors he would be returning the sum after failing to find a suitable target company to take public through a merger.
Christopher Goodney | Bloomberg | Getty Images
Billionaire investor William Ackman, who had raised $4 billion in the biggest-ever special purpose acquisition company (SPAC), told investors he would be returning the sum after failing to find a suitable target company to take public through a merger.
The development is a major setback for the prominent hedge fund manager who had initially planned for the SPAC to take a stake in Universal Music Group last year when these investment vehicles were all the rage on Wall Street.
In a letter sent to shareholders on Monday, Ackman highlighted numerous factors, including adverse market conditions and strong competition from traditional initial public offerings (IPOs), that thwarted his efforts to find a suitable company to merge his SPAC with.
“High quality and profitable durable growth companies can generally postpone their timing to go public until market conditions are more favorable, which limited the universe of high-quality possible deals for PSTH, particularly during the last 12 months,” said Ackman, referring to the ticker symbol for his SPAC.
In July 2020, Pershing Square Tontine raised $4 billion in its initial public offering and wooed prominent investors ranging from hedge fund Baupost Group, Canadian pension fund Ontario Teachers and mutual fund company T. Rowe Price Group.
Stock picks and investing trends from CNBC Pro:
SPACs, also known as blank-check companies, are publicly-listed shells of cash that are created by large investors — known as sponsors — for the sole purpose of merging with a private company. The process, which is similar to a reverse merger, takes the target company public.
SPACs peaked during 2020 and the early part of 2021, helping rake in paper gains worth hundreds of millions of dollars for a number of prominent SPAC creators like Michael Klein and Chamath Palihapitiya.
However, over the past year, companies that merged with SPACs have performed poorly, forcing investors to shun blank-check deals. That coupled with tighter regulatory scrutiny and a downturn in equity markets have practically shut down the SPAC economy, with several billions of dollars at stake.
Moreover, the record-breaking performance of regular IPOs in the United States in 2021 posed competitive challenges for SPAC sponsors like Ackman, as several richly valued startups chose to list their shares on exchanges through traditional routes instead.
“The rapid recovery of the capital markets and our economy were good for America but unfortunate for PSTH, as it made the conventional IPO market a strong competitor and a preferred alternative for high-quality businesses seeking to go public,” Ackman said.
In July last year, Ackman’s efforts to take a 10% stake in Universal Music, which was being spun off by French media conglomerate Vivendi, through his SPAC were derailed due to regulatory hurdles. The U.S. Securities and Exchange Commission objected to the deal and Ackman put the investment into his hedge fund instead.
“While there were transactions that were potentially actionable for PSTH during the past year, none of them met our investment criteria,” Ackman said.
Ant aims to file preliminary prospectus as soon as July-sources
Ant needs CSRC’s guidance on timing of prospectus filing-source
Ant says there is no plan to relaunch its IPO-statement
Warburg Pincus valued Ant at $180 bln at end-March-source
HONG KONG, June 9 (Reuters) – China’s central leadership has given billionaire Jack Ma’s Ant Group a tentative green light to revive its initial public offering (IPO), two sources with knowledge of the matter said, in the clearest sign yet Beijing is easing its crackdown on the tech sector.
Ant, an affiliate of Chinese e-commerce behemoth Alibaba Group Holding Ltd (9988.HK), aims to file a preliminary prospectus for the share offering in Shanghai and Hong Kong as early as next month, the sources said, declining to be named due to the sensitivity of the matter.
The fintech giant will need to wait for guidance from the China Securities Regulatory Commission (CSRC) on the specific timing of the prospectus filing, said one of the sources.
Register now for FREE unlimited access to Reuters.com
Register
In a publicly released statement, Ant said there was no plan to relaunch its IPO, without elaborating. It did not respond to Reuters request for comment on whether it had received a green light from Beijing.
The company’s stock market listing was hastily shelved at the behest of Beijing in November 2020. At the time, it was slated to be valued at around $315 billion and planned to raise $37 billion, which would have been a world record.
“Under the guidance of regulators, we are focused on steadily moving forward with our rectification work and do not have any plan to initiate an IPO,” Ant said on its WeChat account late on Thursday.
Neither the CSRC nor China’s State Council Information Office, which handles media queries for central leaders, responded to Reuters’ request for comment.
Ant wants to keep the IPO revival plans low profile pending a formal announcement, after having attracted regulatory glare in its first attempt back in 2020 with the waves the offering created as the world’s largest ever equity float, a separate source with direct knowledge of the matter said.
Chinese authorities pulled the plug on the IPO and cracked down on Ma’s business empire after he gave a speech in Shanghai in October 2020 accusing financial watchdogs of stifling innovation.
The IPO’s derailment marked the start of a regulatory crackdown to rein in China’s huge homegrown technology sector, which spread to other industries, including property and private education, wiping billions off market capitalisations and triggering layoffs at some firms.
With its economy slowing in a politically sensitive year when Xi Jinping is expected to secure an unprecedented third term as party leader, Beijing is looking to loosen it grip on private businesses including tech giants to help it meet a growth target of 5.5%, something economists have said will be hard to reach given COVID-19 lockdowns. read more
“They are rolling back on their crackdown to counterbalance the lockdown they’ve had. Any data out of China lately has been dreadful because of lockdowns and the last thing they want to do is compound that issue. In the next three to six months we are likely to see China’s crackdown unwound,” said David Madden, market analyst at Equiti Capital in London.
A revival of the IPO may also mark a rehabilitation of sorts for Ma, who has been maintaining a low public profile since Beijing swooped.
EASING EFFORTS
Chinese Vice-Premier Liu He last month told tech executives the government supported the development of the sector and will back firms pursuing listings at home and abroad. read more
In another sign of Beijing’s softer stance, China’s ride-hailer Didi Global, which has been under a cybersecurity probe since last year, is in advanced talks to buy a third of a state-backed electric-vehicle maker, Reuters reported on Wednesday.
News of the talks comes after the Wall Street Journal reported on Monday that Chinese regulators are set to conclude their investigations into Didi , which could offer more hope to investors about its recovery. read more
Bloomberg reported earlier on Thursday that Chinese financial regulators had started early stage talks on a potential revival of Ant’s stock market debut, without mentioning a timeline. read more
The top securities regulator had established a team to reassess the share sale plans, Bloomberg reported.
The regulator later said in a statement it had not conducted any assessment or research work regarding an Ant IPO.
The U.S. listed shares of Alibaba, which owns nearly one-third of Ant, were down 7% after earlier rising as much as 7% in pre-market trading on the Bloomberg report.
U.S. private equity firm Warburg Pincus, a big investor in Ant’s 2018 private fundraising, lowered its valuation of Ant to about $180 billion at end-March from $221 billion one year earlier, a separate source said.
The regulators have directed Ant to restructure as a financial rather than tech firm, and sources and analysts have said the financial sector typically carries lower valuations.
Warburg Pincus declined to comment on Thursday.
“The size of Ant and the IPO will have to be smaller than what was planned in 2020 because the market conditions have changed and cannot be compared to now,” said Dickie Wong, executive director of Kingston Securities in Hong Kong.
U.S.-listed shares of Chinese tech and e-commerce firms including Didi and Alibaba have gained this week on hints Beijing’s one-and-a-half year long crackdown may be easing.
Register now for FREE unlimited access to Reuters.com
Register
Reporting by Julie Zhu; Additional reporting by Medha Singh, Abinaya Vijayaraghavan, Scott Murdoch, Kane Wu and Vidya Ranganathan; Editing by Sumeet Chatterjee, Carmel Crimmins, Elaine Hardcastle and David Evans
Our Standards: The Thomson Reuters Trust Principles.
Wall Street is still trying to bleed retail investors. But they’re no longer all that eager to get bled.
By Wolf Richter for WOLF STREET.
In terms of my Imploded Stocks column, which has been getting longer and longer, this addition is special: When the tiny EV outfit Phoenix Motor went public on Wednesday, the shares [PEV] instantly kathoomphed into the void.
From the IPO price of $7.50 down to about $4.50 was just a void, and trading volume started below $4.50. Shares ended the first day of trading at $4.13, having plunged 46%. In early trading today, shares plunged another 10% and are currently a 3.66, down 51% from the IPO price yesterday. This is the chart by the minute of the now infamous first day:
To make the share offering more palatable to leery investors, the offering had been downsized to 2.1 million shares, down from 2.5 million shares still imagined the day before in the SEC filing, and the IPO price was set at $7.50, at the lower end of the $7.00 to $9.00 range indicated the day before.
With this IPO, Phoenix raised just $17.75 million, giving it a valuation of $150 million. That $17.75 million it raised comes in handy because in its S-1 filing with the SEC, the company said that it had only $66,000 in cash left over at the end of March. Which explains the desperation of the IPO. Because that $66,000 has likely been burned up by now.
In the S-1 filing, the company said that it had only $2.9 million in revenue in 2021, which generated a loss of $14.6 million. So the funds it raised might give it enough cash to operate for a little over one year at the 2021 burn-rate.
Phoenix has been installing electric powertrain systems into utility vans, trucks, and shuttlebuses that are based on the Ford E-350 and E-450 cutaway chassis that were originally designed for internal combustion engines. A few shuttle buses are used at the LAX Wally Park parking complex. The company has been doing this for years. These are essentially after-thought conversions of ICE vehicles into EVs.
Converting a chassis designed as an ICE vehicle is the costliest way of building a mediocre after-thought EV. Legacy automakers and startups are working on blank-sheet commercial electric vans and trucks, and that’s the competition going forward.
Phoenix says in a filing with the SEC that it is now working on a “ground-up chassis,” meaning its own blank-sheet design of an EV chassis.
But wait… That $17.75 million it raised in the IPO is not enough to design an actual EV from ground up, and ramping up manufacturing of an actual EV requires hundreds of millions of dollars, and more likely a couple of billion dollars to get volume production going. The $17.75 million the company raised in the IPO is not enough to do much of anything in the capital-intensive world of manufacturing.
The owner of Phoenix is an entity of SPI Energy, which acquired Phoenix Motor in 2020. SPI is a Chinese company, headquartered in Shanghai. It installs solar panels, among other things. The Chinese company set up an entity in the US, which then went public in the US on January 19, 2016 [SPI].
In the morning of the first day of trading on January 19, 2020, amid huge hype and hoopla, SPI’s chairman Xiaofeng Peng and his management team rang the opening bell of the Nasdaq. And of course, it was the opening bell of a process by which American investors got fleeced.
Amid all the hype and hoopla by which Wall Street investment banks are trying to lure retail investors into handing over their money, the stock spiked to over $170 on the second day, its all-time high, and then collapsed 99%. Today in early trading, it’s at $2.34
So, now that the blistering EV IPO and SPAC boom has been in full collapse mode for over a year, with many EV IPO stocks and EV SPAC stocks down 80% and over 90%, SPI needed to start unloading Phoenix while it still could, and they needed investors to come up with that $17.75 million pronto – really a lot more, but that didn’t work out because investors refused — to keep the company going long enough for SPI to unload the rest of it, and they needed to get this company out the IPO window that has already closed.
This misbegotten IPO might not set an absolute all-time record in terms of insta-collapses – I haven’t checked the history of IPO insta-collapses – but it sure was a sight to behold.
Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
