It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price

Warren Buffett

Porsche is for sale. At least, it will be on September 29, if media reports on the subject have any veracity to them. That’s when the Volkswagen Group will offer up a portion of the famed automaker in an initial public offering. At that point, everyone from institutional to retail investors can, for the first time, hold a (small) piece of the company that brought us the most iconic of supercars, the 911.

That brings up all sorts of questions, like “Why do they need the money?” and “How much is it going to cost?” But if, for some reason, you want in on the impending IPO, the first question that you need to ask yourself is – just as it would be if you were buying one of the company’s fantastic automobiles – is it a good value? If you think the answer might be “yes,” then, unless you’re one of those GameStop idiots on Reddit, you’re going to want a whole bunch more information before firing up the ol’ Questrade account. Here’s a quick primer that will at least get you started.

Why an IPO?

This is probably the simplest of questions in an otherwise extremely complicated business. Volkswagen has made all sorts of promises surrounding the electrification of its fleet — its fleet in Europe will be completely battery-powered by 2035, for instance — that require an investment currently pegged at more than 70 billion euros over the next five years. That, even for the world’s second-largest automaker is, in the technical terms preferred by Wall Street, a sh#!load of money.

Some of that, of course, can be sourced from ongoing profits — net cash flow for the entire Volkswagen Group was a heady 8.6 billion euros last year — as well as taking on debt. But both have their limitations, so just like you or I when we might find ourselves fallen upon hard times, it’s selling something. Actually, part of something.

The deal

The most valuable thing in VW’s portfolio is Porsche. It may sell but three per cent of the cars peddled every year under the Volkswagen flag, but it generated no less than 34 per cent of Volkswagen’s automotive profits in the first nine months of 2021. In other words, it’s a going concern. Hence why VW is selling it. Or, as I said, a part of it.

motor mouth: how much is a piece of porsche worth?

A traffic light in front of Porsche’s main plant is green Photo by Reuters

According to Forex, an over-the-counter foreign exchange company, the IPO will consist of 911 million shares (yes, even something as rigorously formal as an initial public offering must bow to the mystique that is Porsche). Half will be ordinary shares. The other half will be preferred shares. Forex says that just 25 per cent of the preferred shares will be listed as part of the IPO, which means that just 12.5 per cent of Porsche will be sold to the public. The company is being valued at about 70 to 75 billion euros, which, by the way, would make it more valuable than Mercedes-Benz, which sells almost 10 times as many cars. Do the math and the projected price of each share should be right around 80 euros at issue. Pretty simple, right?

Not quite.

It gets complicated

The “preferred” shares that will be issued to the public — outsiders like you and me — don’t have any voting rights. The ordinary shares — those not being sold in the IPO — do. In other words, if you buy into the share-offering, no matter how big a portion you buy — be it one share or five million — you will have no say in how the company is run. Only those holding ordinary shares — and yes, the nomenclature does sound a bit duplicitous, don’t you think? — will accumulate a voting interest in Porsche.

Who gets access to those “ordinary” shares?

Existing shareholders. More specifically, an entity called Porsche Automobil Holding SE (Porsche SE), which will buy 25 per cent of those ordinary — that should be read “voting” — shares. Now it gets even more complicated, because Porsche SE is already the biggest shareholder in parent company Volkswagen AG. As the chart just below explains, the holding company owns 31.4 per cent of the entire Volkswagen empire, but more importantly, 53.3 per cent of the voting rights.

motor mouth: how much is a piece of porsche worth?

A chart outlining the ownership of Volkswagen shares Photo by Volkswagen

But wait, it gets better. All of the ordinary — again, voting — shares of Porsche SE are in the hands of the Porsche and Piech families, both direct descendants of the great man himself, Ferdinand Porsche. In other words, since they already own the majority of voting shares in parent company Volkswagen and are buying a huge chunk of the voting shares in the new Porsche AG entity, Porsche will, as Forex so aptly puts it, “remain firmly under the control of both Volkswagen and Porsche SE.”

In other words, there will be absolutely no loss of control as a result of the stock offering and the monies garnered from them; the Porsche and Piech families remains as resolutely in charge of Porsche’s destiny as they ever were. The only price paid for the privilege will be that they have to pay a 7.5 per cent surcharge to the IPO pricing estimated above.

Another twist to the plot

According to Reuters, in the case of a successful IPO — no definition of “successful” is offered, but one assumes the newswire means if the shares sell at the expected pricing — “Volkswagen will call an extraordinary shareholder meeting in December where it will propose to pay 49 per cent of total proceeds” of the sale of the stocks. In other words, with the IPO expected to raise between 18.1 and 19.5 billion euros, Volkswagen will turn around and pay out some 8.9 to 9.1 billion of those Euros to its existing shareholders…

Which just happens to include the aforementioned Porsche SE, which, I hope you’ll remember, owns 31.4 per cent of Volkswagen. In other words, the Piech and Porsche families will pay Volkswagen a boatload of money on September 29 — the projected date of the IPO — to buy shares of the portion of Porsche it’s selling. But in December, VeeDub will refund them three billion Euros or so.

No matter how big a portion of the share offering you buy — be it one share or five million — you will have no say in how the company is run

All told, according to my rudimentary back-of-the-napkin calculations, Porsche SE will be out just $6.9 billion to extend their (vote) controlling interest in Porsche, not to mention the future dividend payouts from Porsche’s profits. To be fair, according to my hedge-fund analyst friend — everyone should have one — it is not at all uncommon for existing shareholders to be rewarded with a special dividend or even a share offering as the result of an IPO. Using that money to offset the cost of the shares you’re actually selling, well, that is a bit rarer.

So, deal or no deal?

If I’ve painted a somewhat unflattering picture of Porsche’s IPO, I’d be remiss in noting that having Porsche SE — again, essentially the Piech and Porsche families — remaining in control of the venerable sports-car maker is probably the best guarantee of future profits to be had from this deal. As questionable as the financial shenanigans might be — not to mention calling those non-voting shares “preferred” — the company, under the families’ guidance, has been a model of superior management and a font of profits.

motor mouth: how much is a piece of porsche worth?

2022 Porsche 911 Carrera 4 GTS Cabriolet Photo by Chris Balcerak

Complain all you want that the rich are getting richer, but I think we can all agree having the Pieches and Porsches in charge is preferable to having the aforementioned GameStop idiots having a vote in how Porsche conducts its future business. The fact that Volkswagen AG and Porsche will end up owning all the voting shares in the new company — Porsche AG — might actually be good news for investors.

It’s certainly lent confidence to the market. Qatar Holding, which already holds 10.5 per cent of Volkswagen shares (and 17.0 per cent of its voting rights) is in for an additional 4.99 per cent. Norway’s wealth fund — the largest such sovereign fund in the world — is buying a chunk as well, as is Abu Dhabi and T. Rowe Price.And, if you want to get in on the deal, I know that Forex — as I am sure other institutional investment firms — will have Porsche AG on offer. Besides, even a cynic like Yours Truly appreciates that (at least a portion of) the money raised is being used to further electrify Volkswagen’s automobiles.

And let’s remember that, voting rights or no, the shares being offered are in the most consistently profitable automaker in the world. “Past performance is no guarantee of future results” may be the most important mouse copy in the investment world, but it’s a good bet that a share bought in Porsche AG will be paying dividends for some time to come.

Keyword: Motor Mouth: How much is a piece of Porsche worth?

CAR'S NEWS RELATED

New Porsche Panamera revealed – South African pricing and launch date

Everything new Price Porsche Panamera Turbo E-Hybrid Porsche Panamera 4 The new Porsche Panamera is arriving in South Africa in the first quarter of 2024 with three models available starting at R2,216,000. Now in its third generation, the luxury performance sedan strikes a sportier appearance than ever before and ...

View more: New Porsche Panamera revealed – South African pricing and launch date

New Porsche Panamera Revealed with Trick Suspension and E-Hybrid Power

Porsche has lifted the veil on its third generation Panamera, with the luxurious grand touring sedan picking up new suspension hardware, revised styling inside and out, more equipment and a range of more potent E-Hybrid powertrains. For its proportions, the Panamera measures in at 5,052mm long, 1,937mm wide and stands ...

View more: New Porsche Panamera Revealed with Trick Suspension and E-Hybrid Power

Porsche’s “Road to Le Mans. The Film” Documentary is a Must-Watch

Image: Porsche Image: Porsche NewsBy: Ryan De Villiers Porsche’s “Road to Le Mans. The Flim” is a 90-minute documentary which recounts the racing journey of Michael Fassbender and Porsche from 2018 to 2023. The film culminates in a recap of the 100th anniversary of the 24-Hours of Le Mans ...

View more: Porsche’s “Road to Le Mans. The Film” Documentary is a Must-Watch

Here's the new third-generation Porsche Panamera

Here’s the new third-generation Porsche Panamera We promise this really is the new third-generation Porsche Panamera. Porsche has reverted to its classic incremental design approach for the switch from G2 to G3 (hope that pleases the model code fans out there), although there are some subtle styling differences if you ...

View more: Here's the new third-generation Porsche Panamera

3rd-gen Porsche Panamera priced at Rs 1.68 crore in India

Currently, Porsche has only listed the Panamera V6 on its Indian website. The third-generation Porsche Panamera made its global debut earlier this week. The new model is priced at Rs 1.68 crore in India, and bookings are set to commence soon. The new Panamera gets subtle styling changes that ...

View more: 3rd-gen Porsche Panamera priced at Rs 1.68 crore in India

Porsche Carrera Cup – Gold Coast Race Two Update

Motorsport Australia Investigatory Tribunal – Porsche Carrera Cup Motorsport Australia has released the findings of an Investigatory Tribunal into the outcome of Race Two of the Porsche Paynter Dixon Carrera Cup at the Gold Coast 500 in October. Earlier this week, Motorsport Australia initiated the Investigatory Tribunal to consider ...

View more: Porsche Carrera Cup – Gold Coast Race Two Update

Four Of The Finest From Exciting Porsche Japan

Not all Porsche 911s are created equal. Well, except for those that are. The ones that are most interesting to you and I, are those that take on a life of their own. The ones that get a little extra special sauce slathered on them, have their power turned up to 11, or ...

View more: Four Of The Finest From Exciting Porsche Japan

Da Costa’s three-minute London penalty stands as Porsche’s appeal rejected

Credit: Nick Dungan courtesy of FIA Formula E Almost four months on from the season nine finale in London, TAG Heuer Porsche Formula E Team’s appeal regarding António Félix da Costa’s three-minute penalty has been rejected by the International Court of Appeal. The appeal being rejected means that the ...

View more: Da Costa’s three-minute London penalty stands as Porsche’s appeal rejected

Porsche Panamera Pricing for South Africa

Next-gen Ford Mustang – The competitors at R1.5 million

Porsche Kills The Panamera Wagon Because Few People Bought One

Porsche Unveils Its Third-Generation Panamera

Unique 2024 Porsche Panamera Turbo Has Two-Tone Paint With Real Gold

2024 Porsche Panamera Debuts With More Hybrid Power, Fancy Active Suspension

Review: Porsche Panamera Turbo E-Hybrid

New-Generation 2024 Porsche Panamera Gets Updated Styling, Powertrains, Technologies

The 2024 Porsche Panamera Has A Wild New Active Suspension

The Porsche Panamera's Trick Suspension Is Unlike Anything We've Driven

Evolution of Porsche 911: A world-renowned sports car

2024 Porsche Panamera Debuts Today: See The Livestream

OTHER CAR NEWS

; Top List in the World https://www.pinterest.com/newstopcar/pins/
Top Best Sushi Restaurants in SeoulTop Best Caribbean HoneymoonsTop Most Beautiful Islands in PeruTop Best Outdoor Grill BrandsTop Best Global Seafood RestaurantsTop Foods to Boost Your Immune SystemTop Best Foods to Fight HemorrhoidsTop Foods That Pack More Potassium Than a BananaTop Best Healthy Foods to Gain Weight FastTop Best Cosmetic Brands in the U.STop Best Destinations for Food Lovers in EuropeTop Best Foods High in Vitamin ATop Best Foods to Lower Your Blood SugarTop Best Things to Do in LouisianaTop Best Cities to Visit in New YorkTop Best Makeup Addresses In PennsylvaniaTop Reasons to Visit NorwayTop Most Beautiful Islands In The WorldTop Best Law Universities in the WorldTop Richest Sportsmen In The WorldTop Biggest Aquariums In The WorldTop Best Peruvian Restaurants In MiamiTop Best Road Trips From MiamiTop Best Places to Visit in MarylandTop Best Places to Visit in North CarolinaTop Best Electric Cars For KidsTop Best Swedish Brands in The USTop Best Skincare Brands in AmericaTop Best American Lipstick BrandsTop Michelin-starred Restaurants in MiamiTop Best Secluded Getaways From MiamiTop Best Things To Do On A Rainy Day In MiamiTop Most Instagrammable Places In MiamiTop Interesting Facts about FlorenceTop Facts About The First Roman Emperor - AugustusTop Best Japanese FoodsTop Most Beautiful Historical Sites in IsraelTop Best Places To Visit In Holy SeeTop Best Hawaiian IslandsTop Reasons to Visit PortugalTop Best Hotels In L.A. With Free Wi-FiTop Best Scenic Drives in MiamiTop Best Vegan Restaurants in BerlinTop Most Interesting Attractions In WalesTop Health Benefits of a Vegan DietTop Best Thai Restaurant in Las VegasTop Most Beautiful Forests in SwitzerlandTop Best Global Universities in GermanyTop Most Beautiful Lakes in GuyanaTop Best Things To Do in IdahoTop Things to Know Before Traveling to North MacedoniaTop Best German Sunglasses BrandsTop Highest Mountains In FranceTop Biggest Hydroelectric Plants in AmericaTop Best Spa Hotels in NYCTop The World's Scariest BridgeTop Largest Hotels In AmericaTop Most Famous Festivals in JordanTop Best European Restaurants in MunichTop Best Japanese Hiking Boot BrandsTop Best Universities in PolandTop Best Tips for Surfing the Web Safely and AnonymouslyTop Most Valuable Football Clubs in EuropeTop Highest Mountains In ColombiaTop Real-Life Characters of Texas RisingTop Best Beaches in GuatelamaTop Things About DR Congo You Should KnowTop Best Korean Reality & Variety ShowsTop Best RockstarsTop Most Beautiful Waterfalls in GermanyTop Best Fountain Pen Ink BrandsTop Best European Restaurants in ChicagoTop Best Fighter Jets in the WorldTop Best Three-Wheel MotorcyclesTop Most Beautiful Lakes in ManitobaTop Best Dive Sites in VenezuelaTop Best Websites For Art StudentsTop Best Japanese Instant Noodle BrandsTop Best Comedy Manhwa (Webtoons)Top Best Japanese Sunglasses BrandsTop Most Expensive Air Jordan SneakersTop Health Benefits of CucumberTop Famous Universities in SwedenTop Most Popular Films Starring Jo Jung-sukTop Interesting Facts about CougarsTop Best Hospitals for Hip Replacement in the USATop Most Expensive DefendersTop Health Benefits of GooseberriesTop Health Benefits of ParsnipsTop Best Foods and Drinks in LondonTop Health Benefits of Rosehip TeaTop Best Air Fryers for Low-fat CookingTop Most Asked Teacher Interview Questions with AnswersTop Best Shopping Malls in ZurichTop The Most Beautiful Botanical Gardens In L.A.Top Best Mexican Restaurants in Miami for Carb-loading rightTop Best Energy Companies in GermanyTop Best Garage HeatersTop Largest Banks in IrelandTop Leading Provider - Audit and Assurance In The USTop Best Jewelry Brands in IndiaTop Prettiest Streets in the UKTop Best Lakes to Visit in TunisiaTop Highest Mountains in Israel