- Volkswagen is in "advanced discussions" about a potential spin-off of its Porsche division.
- A standalone Porsche could be worth almost as much as VW's current €110 billion market cap.
- VW could retain control of the highly profitable Porsche and use new funds from an IPO for EV development.
Volkswagen Group said Tuesday that it is in "advanced discussions" with its largest shareholders about an initial public offering of Porsche division, confirming earlier reports from Manager Magazin and Bloomberg.
Analysts estimate the brand could have an IPO valuation in the range of €90 billion to €110 billion ($102 billion to $124.5 billion), according to the Wall Street Journal and Bloomberg, respectively.
That's roughly equal to VW's current market cap around €110 billion, despite the division making less than 3% of the total vehicles sold by the VW Group.
Although Porsche's unit sales are relatively small, the brand's pre-pandemic operating profit margin was roughly double that of VW-badged passenger cars, and Porsche's profits contributed one-third of VW's total profits in 2021.
But that higher profitability isn't the only reason for a supercharged valuation — analysts are also eyeing the company's electric future. one reason.
By offering 25% of Porsche in an IPO, VW could raise between €23 billion and €27.5 billion ($26 billion to $31 billion) in fresh capital, the Journal reported. Those funds could be put to use in Porsche and VW's continued push into electrification as the companies aim to compete with Tesla.
Porsche has a goal of becoming all-electric by 2030 — apart from the 911 — led by its existing Taycan and forthcoming Macan EV models.
Before the deal can proceed however, VW must convince both its board of directors, which includes representatives from labor unions and state government, as well as its majority shareholders.
The shareholders in question – heirs of Ferdinand Porsche, who designed VW's iconic Beetle – are represented by Porsche Automobil Holding, which controls 53% of VW's stock, while VW owns the Porsche brand.
VW is the second-largest automaker in the world after Toyota, making brands including Audi, Lamborghini, Bentley, Porsche and more.