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Porsche IPO draws commitments from Qatar Investment Authority, Norway Wealth Fund

Porsche IPO draws commitments from Qatar Investment Authority, Norway Wealth Fund

  • The IPO is expected to value the sports carmaker at $84 billion

Germany’s Volkswagen AG has lined up commitments from anchor investors including the Norwegian sovereign wealth fund as it pushes ahead with a listing of its Porsche AG unit, people with knowledge of the matter told Bloomberg on Wednesday.

The listing is anticipated to reopen European markets, which have been impacted from the ongoing Ukraine-Russia conflict, inflation and high-interest rates, all of which have catalysed investors to shy away from equity offerings.

Qatar Investment Authority has made preliminary commitment to buy a 4.99 percent stake, in one of Europe’s largest upcoming initial public offerings (IPO).

Other investors include Norges Bank Investment Management, which has agreed to buy stock in what is set to be one of Europe’s largest initial public offerings, US-based investment banking company T Rowe Price Group Inc., and energy drink Red Bull’s billionaire founder Dietrich Mateschitz.

However, Mateschitz is less likely to proceed with an investment after the collapse of a potential Formula 1 partnership between Porsche and Red Bull, Bloomberg reported.

Volkswagen, which aims to finalise a price range for the IPO over the weekend, is currently seeking a valuation of around €70 billion ($70 billion) to €85 billion ($85 billion).

“The company is telling fund managers that preliminary investor interest is already enough to cover the deal several times over, one of the people said,” Bloomberg said, adding Volkswagen will start taking investor orders early next week.

The details of the share sale is subject to change.

IPO investors will be sold preferred shares in Porsche that don’t carry voting rights. The billionaire Porsche and Piech clan, which controls Volkswagen, is separately buying common stock that will give it a blocking minority stake in Porsche.

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“Analysts at HSBC Holdings Plc, which doesn’t have a role on the offering, wrote in a note Tuesday that Porsche is worth just 44.5 billion euros to 56.9 billion euros. The carmaker’s pricing power may wane as supply recovers over the next two years, while demand may take a hit under a recessionary environment, analysts including Edoardo Spina wrote,” Bloomberg said.

Aside from volatile markets, the sports carmaker is also contending with corporate governance concerns.

“Some investors have voiced doubts about the surprise appointment of the unit’s chief executive to the helm of VW, which will continue to hold the bulk of its shares.”

The share sale will help direct funds to Europe’s biggest carmaker to foot the staggering cost of electrification and software development.

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