The hidden and worries behind porsche’s listing

2022-06-20 0 By

Byd stopped production of fuel cars to fully switch to electric cars, this is not new for international car companies, Porsche listing is new.There had been a lot of internal debate and rumors about porsche’s independent listing, but it was officially kept quiet until 2022.It emerged that Volkswagen has chosen a lead bank for porsche’s IPO, which people familiar with the matter said could value the German carmaker at 90 billion euros (633.1bn yuan).If the fund shortage is not the main reason for the listing of Volkswagen or Porsche, it is believed that porsche’s IPO, financing or second, under the impact of new energy vehicles to obtain the valuation of capital market and expand financing channels may be the key.Is that really the case?Porsche as Vw profit cow?Recently, Volkswagen Group announced that the board of Directors of Volkswagen and Porsche Holding have reached a framework agreement for the independent listing of porsche, the group’s brand.Porsche is the latest luxury car brand to seek an IPO after Ferrari and Aston Martin.Vw recently selected Goldman Sachs, Bank of America, jpmorgan Chase and Citibank as co-coordinators for the PORSCHE brand IPO, according to Bloomberg.Porsche Holding is reportedly planning to take a 25% minority stake in porsche’s IPO.Porsche’s decision to go public has long been expected.According to the 2021 annual financial report of Volkswagen Group, under the influence of adverse circumstances such as chip shortage, although the company’s overall sales volume decreased by 6.3%, the sales revenue increased by 12% to 250.2 billion euros, and the operating sales return rate before special item expenses reached 8%, far higher than the 4.8% in fiscal year 2020.In July 2021, Volkswagen released its NEW AUTO strategy, which aims to accelerate the company’s transformation into a software-driven mobility service provider.To achieve this goal, Vw will need to invest a lot of money.In 2021, the company’s cost reduction plan is initially effective, with significant improvement in net cash flow and net current assets.But research and development costs in the automotive business rose 12.2 per cent year on year, holding the r&d spending rate at 7.6 per cent.When tightening the pockets of throttling no more start space, open up new financing channels is an inevitable choice.Among more than ten brands of Volkswagen, Porsche, aiming at the high-end market, has maintained a steady growth in recent years and is the company’s “profit cow”.In 2021, Porsche cemented its position as “one of the most profitable carmakers in the world” with a strong performance.In the reporting period, Porsche reported revenue of 33.1 billion euros, up 15 percent year on year;Sales profit was 5.3 billion euros, up 27 percent year on year, and the return on sales reached 16 percent, far exceeding the level of Volkswagen Group as a whole.In one year, Porsche delivered 301,915 new cars to customers worldwide, a record high.With nearly 96,000 units delivered in The Chinese market, the brand has been the largest single market in the world for seven consecutive years.”The average age of Porsche owners in China is 15-20 years younger than those in the US and Europe, and the proportion of female owners is higher. Their demand for digital and smart connectivity of vehicles is the highest in the global market,” said Porsche.Under the trend of new energy vehicles, Porsche has maintained its brand tone and continued to gain consumer recognition. Its first pure electric vehicle, Taycan, delivered 41,296 units throughout the year.Porsche expects electric models to account for half of the brand’s sales in 2025, rising to 80% by 2030.The relationship between Porsche and Volkswagen has been a tumultuous one.At present, Vw owns 100 per cent of Porsche AG, but Porsche SE owns 53 per cent of vw.While the terms of porsche’s IPO have yet to be finalised, existing plans suggest the Porsche and Piech families will get a minority stake of 25 per cent plus one share, which would make it possible for the two families to regain direct influence over the brand.Behind the complex shareholding relationship lies a history of Italian family infighting.In 1951, Ferdinand Porsche, founder of The Porsche Company and founder of Volkswagen, died and divided the family business equally among his son Ferri, daughter Louise and their children.By agreement, his brother, Ferry, took control of the family business.The division of a bowl of water became the beginning of a family dispute.Of the third generation, Louise’s second son, Ferdinand Piech, did best.He had an amazing talent for car development and was extremely technical, building a core team of followers within the group. The Porsche 917 he engineered became the absolute king of the race track.The family was increasingly divided by Piech’s forceful style, and he had an affair with his cousin Gerhard’s wife, Marena.They divorced, remarried and had two children.In 1971, ferri and Louis, the second generation of the family, held a family meeting and decided that the company would remain wholly owned by the family, but the family members withdrew from management.Piech was forced out of Porsche.At this point, the chairman of Mercedes came to Piech for help, and he produced a prototype of a five-cylinder diesel engine in just five months.He then moved to Audi, a wholly owned subsidiary of Volkswagen, as an engineering and technology manager, gradually rising to vice president of the brand.In the 1980s, German cars were strongly impacted by Japanese cars, and Volkswagen once fell into operating losses.Piech was appointed CHIEF executive of Volkswagen in 1993.After a series of controversial maneuvers and ruthless cost controls, Piech took VW from the world’s 16th largest carmaker to the fourth, quadrupling its market value and becoming chairman of the VW Group in 2002.On the other hand, the Porsche family now owns more of Porsche than the Piech family, after several intra-family share deals.In 2005, Ferri’s third son, Wolfgang Porsche, took over as chairman of the company’s board.At that time, Under the operation of the then CEO Of Porsche Wiedeking, Porsche started a “small fish eat big fish” plan, trying to take control of Volkswagen Group with high leverage.Porsche borrowed from 15 banks and planned to raise more than 10 billion euros. Through market operation, it evaded relevant laws and regulations and bought large shares of Volkswagen circulating in the open market, and acquired 50.7% controlling shares of Volkswagen Group.Piech did not want to cede his position in the VW group, but neither did he want to confront the family directly, so he resorted to technical absences, forcing the negotiations to stall and drag on.The financial crisis of 2008 turned the tables.Faced with its own lack of liquidity, the united Loan bank tightened lending, stopped lending, and asked Porsche to repay the loan.Porsche is saddled with debt of more than €9 billion and is riding a tiger.At this point, flush with cash, Piech regained control.After many battles, In July 2009, Volkswagen Group reverse takeover of Porsche automobile business, Porsche Holding is still the largest shareholder of Volkswagen Group.Mr Piech and Mr Wolfgang joined vw’s board as the biggest and second-biggest shareholders, leaving Mr Wiedeking.But the Cousins continued to fight.Piech’s maverick and domineering style made him a brilliant career, but it also brought many enemies.Many of his once close partners turned against him.In 2015, the rift between Piech and CEO Winterkorn grew. Piech asked the board to oust Winterkorn, but Wolfgang, along with four other shareholders, voted 5-1 to force Piech to resign.On Aug. 2, 2019, Piech died at the age of 82, bringing the third generation of the family feud to a close.In the new energy tide, traditional car companies have to put down their previous arrogance and aim to catch up with Tesla.Volkswagen Group CEO Herbert Diess said: “The automotive industry will be fundamentally transformed in two life cycles: the profit pool will shift from traditional cars to electric vehicles, and then fundamentally to software.”In recent years, new energy vehicles have created one myth after another in the capital market. Even before the products fall into the ground, the market value can exceed 100 billion dollars.Such a crazy market, the transition of traditional car companies naturally want to share a slice of the soup.When interests clash, the best of friends can turn into enemies.And when interests align, the biggest disputes can be put aside.The family feud is far less important than trying to claw back market share lost to Tesla.It is the common goal of Porsche and Volkswagen to promote porsche to go public and obtain financing to accelerate the new energy transformation.Hans Porsche, porsche’s chief executive and chairman of VW’s supervisory board, said: “Cash flow will increase further and future-oriented investment policies and attractive dividend policies are expected.”Under the arduous challenge of the comprehensive transformation to electric intelligence, Volkswagen needs to establish new technological advantages more quickly.It has been revealed that vw may sell a 25% stake in Porsche in the IPO and use the cash to develop electric cars and software.PPE luxury electric vehicle platform jointly developed by Audi and Porsche will become an important high-end electric vehicle platform of Volkswagen.On the other hand, the capital market is also deepening the concern of “PPT car”, once the bubble burst, the market loss is inestimable.More and more capital will focus on the traditional car enterprises, the traditional car enterprises through the separation of listing to obtain more financial support has become a favorable thing.It is also the consensus of both sides to increase the flexibility of the Volkswagen Group and the freedom of Porsche through listing.Mr Obermur believes capital markets value homogeneity and more focused business units.Large companies tend to be undervalued because the individual value of their business units, the value of their sub-brands, has never been reflected 1:1 in the capital market.Insiders believe porsche’s IPO is expected to value it at 90 to 100 billion euros, about the same as BYD’s market value.Volkswagen’s market value has also been rising recently on the back of porsche’s announcement, topping $160 billion at one point.To some extent, Porsche saw its own brand production as a “profit cow”, rather than a drain on the group’s resources.Spin-offs allow brands to better reflect market valuations and allow profits and financing to better serve their growth.According to Obermur, Porsche expects to invest 15 billion euros globally in electric mobility and digital transformation by 2025.Its newly formed Cellforce company is focusing on the development and production of high-performance batteries, which are expected to reach mass production by 2024.Recently, Porsche has also accelerated its alliances with technology companies in the new energy transition to improve the speed and flexibility of the brand facing the market.Earlier, Porsche said it would work with Apple to expand its business.Spin-off business, listed financing, this is the car enterprises in order to catch up with the tide of new energy in the recent year to adopt a common strategy.However, the total amount of the market is always limited. Whether Porsche can establish its own competition barriers in the new energy field and hold up high valuation is the first obstacle it will face.In February, a freighter bound for the United States from Germany caught fire, sinking 4,000 Volkswagen Cars on board at a cost of more than $401 million.No official investigation has yet been released, but the Portuguese Navy says it has reason to suspect lithium batteries from the ship’s electric cars may have caused the fire.It’s a small probability, but perhaps a reminder: Is it really safe to bet resources in the same direction?Author: Yi Ran