Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Europe By The Numbers
  • Car Cutaways
  • Resource Center
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: All or nothing: Why circular business models require a holistic approach
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
    • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
September 17, 2022 08:35 AM

Porsche poses governance dilemma for investors weighing IPO

VW is targeting a valuation of up to 75 billion euros ($75.1 billion) for Porsche. Trading will begin on the Frankfurt Stock Exchange on Sept. 29.

Reuters
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Porsche Taycan Munich Show 2021
    REUTERS

    Visitors look at a Porsche Taycan electric car during the 2021 Munich IAA auto show. Porsche's electrification plan scores well with investors on environmental issues.

    The structure of the planned Porsche IPO

    Click here for details on the structure of the planned Porsche IPO.

    Porsche's leadership set-up and the limited influence for stock market investors after its IPO are prompting some fund managers -- particularly those focused on governance issues -- to think twice about whether to invest in the listing.

    Volkswagen Group said on Sunday that it is targeting a valuation of up to 75 billion euros ($75.1 billion) for Porsche. Trading will begin on the Frankfurt Stock Exchange on Sept. 29.

    While Porsche scores well with investors on environmental issues, aiming for more than 80 percent of newly sold cars to be fully-electric by 2030 from 13.6 percent in 2020, some are concerned over its governance.

    The main issue is the fact Oliver Blume, who became VW Group CEO this month, will also stay on as CEO of Porsche, raising potential conflicts of interest.

    Another is the relatively small proportion of shares being offered to external investors -- just 12.5 percent of Porsche's total capital -- which would leave them with little influence.

    Ben Ritchie, head of European equities at investment company abrdn, said Porsche was "definitely something we'll have a look at, but we'll have to go away and give the governance a really good think."

    "It's not great but is it passable?" he added.

    VW's emissions-rigging scandal, when the automaker admitted in 2015 to cheating U.S. diesel engine tests, are a reminder to investors that ESG -- environmental, social and governance -- issues are not just about the environment but also about the way companies are run.

    'Good culture'

    Blume played down concerns over his dual role in an interview with Reuters this month, saying only some investors had raised questions about the structure. He described "huge interest" from investors in the IPO.

    PORSCHE

    VW Group CEO and Porsche CEO Oliver Blume played down concerns over his dual role, saying only some investors had raised questions about the structure.

    Georg Kell, head of Volkswagen's independent sustainability council, defended the decision for Blume to be CEO of both Volkswagen and Porsche.

    "Keeping Blume in the double function is a winner. Blume will bring the good cultural experience of Porsche to the Volkswagen Group as a whole," he said.

    Estimates of Porsche's valuation vary widely. HSBC analysts this week put the price tag at 44.5-56.9 billion euros, but a source close to the listing said it was more likely to be 70-80 billion euros.

    Among Porsche's listed rivals, Ferrari's market capitalization is 36 billion euros, while Mercedes-Benz is worth just under 62 billion euro.
    "As a result of the capital and management structures, there is the potential for conflict of interest within governance," said Richard Hilgert, senior equity analyst at Morningstar.

    "Some investors may be constrained by ESG guidelines from owning Porsche," he added, though he said the offering could be attractive to investors who focus less on such issues.

    Few independent directors

    Chi Chan, European equities portfolio manager at Federated Hermes, highlighted Blume's dual CEO roles as an issue in written comments to Reuters, echoing concerns from Volkswagen investors Union Investment and DWS.

    "Governance best practice is for the management board to only have one executive position to ensure their focus and to avoid conflicts of interest," Chan said.

    He also noted a low proportion of independent directors at the company, which will remain heavily influenced by Volkswagen and its main shareholder, Porsche SE, the Porsche-Piech family holding company that has a majority stake in VW Group.

    "While we try to engage with companies to improve their governance ... it’s difficult to see Porsche SE/VW/Porsche AG acquiescing to any of these moves to best practice (possibly separate CEOs, in time), so investors need to be mindful of them in deciding how much it affects the attractiveness of the shares for them," Chan said.

    Gilles Guibout, head of European equity strategies at AXA Investment Managers in Paris, said he was concerned about the fact that only preference shares would be issued, which don't have voting rights.

    "This means minority shareholders will have no rights," he said.

    Andrea Scauri, senior portfolio manager at Volkswagen investor Lemanik Asset Management in Milan, also pointed to the small proportion of shares being offered as a potential deterrent.

    "There will be so few shares on offer, I hardly think they are going to give shares to me."

    Related Article
    Porsche is worth much less than what is being touted, analysts say
    Porsche could still join F1 after Red Bull talks collapse
    Porsche family seeks redemption with IPO after tearful defeat
    Porsche Panamera poised to go all-electric
    DAILY NEWSLETTER: Sign up and get the top news of the day in Europe every business weekday.
    RECOMMENDED FOR YOU
    Stellantis confirms start dates for 5 new models at Melfi factory
    Recommended for You
    Jeep Compass Melfi
    Stellantis confirms start dates for 5 new models at Melfi factory
    Steel production
    Automakers are buying 'green steel' that is far from carbon-free
    BYD ATTO 3.png
    Tesla sales drop brings BYD closest ever to global EV crown
    Main Image Cars
    Sponsored Content: Driving the future of mobility with SenseAuto: The AGI Power Behind the Wheels
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Europe By The Numbers
    • Car Cutaways
    • Resource Center
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: All or nothing: Why circular business models require a holistic approach
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • PUBLICIS SAPIENT: The power of post-purchase: How automakers can maximize customer lifetime value
        • TOYOTA EUROPE: Toyota Motor Europe's next-gen C-HR: sensory innovations revealed by Vehicle UX leader
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
        • SENSEAUTO: Driving the future of mobility with SenseAuto: The AGI power behind the wheel
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us