Volkswagen (ETR:VOWG_p) AG (VW) has priced preferred shares in the flotation of Porsche AG at 76.50 euros to 82.50 euros per share, translating into a valuation of 70 billion to 75 billion euros for the luxury car maker.
At the upper end of the range, the float would become Europe's third-largest IPO on record, with trading set to begin on September 29, 2022.
As part of the listing, 911 million Porsche shares owned by VW will be divided into 455.5 million preferred shares and 455.5 million ordinary shares. Up to 113,875,000 preferred shares, carrying no voting rights, will be placed with investors over the course of the IPO.
The sovereign wealth funds of Qatar, Abu Dhabi and Norway as well as mutual fund company T. Rowe Price will subscribe up to 3.68 billion euros worth of preferred shares as cornerstone investors, at the upper end of the valuation, VW said.
"We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors," VW chief financial officer and chief operating officer Arno Antlitz said in a statement on Sunday.
In line with VW's agreement, announced earlier in September, with the luxury car firm's largest shareholder Porsche SE, 25% plus one ordinary share in the brand, which do carry voting rights, will go to Porsche SE at the price of the preferred shares plus a 7.5% premium.
Porsche SE, the holding firm controlled by the Porsche and Piech families, will finance the acquisition of the ordinary shares with debt capital of up to 7.9 billion euros, it said in a separate statement.
VW will call an extraordinary shareholder meeting in December 2022 where it will propose to pay 49% of total proceeds to shareholders in early 2023 as a special dividend. Total proceeds from the sale will be 18.1 billion to 19.5 billion euros.
In a note to clients, analysts at Stifel noted that the valuation range would imply a 2022 PE-ratio of approximately 15 times for Porsche and an implied valuation of the VW stub would be a 1.3 times the PE-ratio with a 70% FCF (free cashflow) yield.
"We continue to believe that a successful IPO of Porsche will allow for a significant long term re-rating of VW preference shares," the Stifel analysts added.