VW to float Porsche?

[burman]

Gossip in the financial press at the weekend (Telegraph) that VW are thinking of selling 25% of Porsche to raise funds for yet more EV investment in the rest of the group.
The share price that they have in mind values Porsche @ £100 billion apparently.

[TDT]

Yep it was in the business news over the weekend.

[Smiljan]

Remember around 10 years ago, Porsche were broke and almost went under. However they owned just over 50% of VW.

VW stepped in and bought up Porsche to avoid both of them going under or being taken over by the Chinese who were sniffing around.

It's some turnaround to value Porsche at what they are today!

[Nuttcase]

I bought a modest share holding in "Porsche" a few years ago as I thought Porsche were doing well with sales and increasing customer base while other car manufacturers were floundering, they paid a dividend and the indicators looked good. Only to discover some time later that I'd bought into Porsche Automobile Holding SE which is largely invested in Volkswagen AG. N0bhead. Ironically it's been one of my better long term purchases and done quite well in the last few weeks.

[hyphen]

In the new EV World where every other car will do 0-60 in 3 seconds, perhaps VAG are considering that the Sports Car badge won't matter as much to consumers buying suvs and saloons? And so see it as peak value.

[breamster]

Smiljan said:

Remember around 10 years ago, Porsche were broke and almost went under. However they owned just over 50% of VW.

VW stepped in and bought up Porsche to avoid both of them going under or being taken over by the Chinese who were sniffing around.

It's some turnaround to value Porsche at what they are today!

Didn't VW briefly become the most valuable company in the world due to some dodgy dealings? A short squeeze costing hedge funds billions. Just googled it. 2008.

[Smiljan]

I do remember at the time that one minute Porsche were loaded an about to own VW and the next the tables had turned and they were skint and VW were loaded and bailing them out.

I’d love to see a documentary on it. With that and the diesel gate compensation it’s amazing VW are still solvent!

[smithyithy]

Nuttcase said:

I bought a modest share holding in "Porsche" a few years ago as I thought Porsche were doing well with sales and increasing customer base while other car manufacturers were floundering, they paid a dividend and the indicators looked good. Only to discover some time later that I'd bought into Porsche Automobile Holding SE which is largely invested in Volkswagen AG. N0bhead. Ironically it's been one of my better long term purchases and done quite well in the last few weeks.

I'm still slightly confused about the Porsche owning VW who own Porsche who own VW situation to be honest

[VonSenger]

Smiljan said:

I do remember at the time that one minute Porsche were loaded an about to own VW and the next the tables had turned and they were skint and VW were loaded and bailing them out.

I’d love to see a documentary on it. With that and the diesel gate compensation it’s amazing VW are still solvent!

Leverage? An abundance of cheap cash maybe? VW played the better hand. I'm sure the information is out there.

[Cheib]

VonSenger said:

Smiljan said:

I do remember at the time that one minute Porsche were loaded an about to own VW and the next the tables had turned and they were skint and VW were loaded and bailing them out.

I’d love to see a documentary on it. With that and the diesel gate compensation it’s amazing VW are still solvent!

Leverage? An abundance of cheap cash maybe? VW played the better hand. I'm sure the information is out there.

This is a good article about it.


https://priceonomics.com/porsche-the-hedge-fund-th...


I was working as a fund manager at the time...to cut a long story short Porsche bought a lot of Porsche shares using a lot of short term debt which was collateralised by the shares they were buying

Global Financial Crisis hits...banks stop lending money on lax terms and demands for repayment are much more rigorous.(if they will lend at all) Volkswagen shares are only valued where they are because Porsche has bought 50% of the company....so when Porsche runs out of money to keep buying and shares needs to repay the debt the shares price falls....so the collateral securing the shares is worth less and Porsche is staring bankruptcy in the face. White Knight to rescue them is VW....

The amount of companies that get caught out by borrowing short term money “because it’s cheap” is incredible. Aston and McLaren have both learnt the hard way in the last 18 months but they weren’t the first and won’t be the last.

[majordad]

Add in a cousin , Ferdinand Piech, wanting to get hold of his cousin, Ferdinand Porsche’s company at last and you had the makings of a Mini TV Series.

[RiccardoG]

Cheib said:

I was working as a fund manager at the time...to cut a long story short Porsche bought a lot of Porsche shares using a lot of short term debt which was collateralised by the shares they were buying

Global Financial Crisis hits...banks stop lending money on lax terms and demands for repayment are much more rigorous.(if they will lend at all) Volkswagen shares are only valued where they are because Porsche has bought 50% of the company....so when Porsche runs out of money to keep buying and shares needs to repay the debt the shares price falls....so the collateral securing the shares is worth less and Porsche is staring bankruptcy in the face. White Knight to rescue them is VW....

That's a great "10,000 ft" summary, thanks for taking the time to write it.

[m444ttb]

majordad said:

Add in a cousin , Ferdinand Piech, wanting to get hold of his cousin, Ferdinand Porsche’s company at last and you had the makings of a Mini TV Series.

With Charles Dance playing Piech I could see that

[majordad]

With the late John Thaw as Ferry Porsche , Nigella Lawson as Piech’s Mother ( Louise ) , and Daniel Craig as Buttzi Porsche.

We’ll find a role for Michael Douglas as well.

[gtsralph]

VW shares are at €243 v €105 April 2020 - been a good investment and guessing value increase built mostly on EV strategy and market acceptance. Ditto Porsche Automobile Holdings up from €30 to €77 over same period. Floating Porsche, or more likely a free float of a sizeable share (e.g. Brembo) would be nice for share prices but not sure about cash flows losing high margin business with heavy EV investment requirements.

[Cheib]

gtsralph said:

VW shares are at €243 v €105 April 2020 - been a good investment and guessing value increase built mostly on EV strategy and market acceptance. Ditto Porsche Automobile Holdings up from €30 to €77 over same period. Floating Porsche, or more likely a free float of a sizeable share (e.g. Brembo) would be nice for share prices but not sure about cash flows losing high margin business with heavy EV investment requirements.

Like many cyclicals VW's share price was destroyed in March 20....where they were a month ago at roughly Eur 180 is about where they were at the beginning of last year pre Covid All the major European OEM's have done similar....they are historically cheap on a P/E basis and ludicrously cheap when you bought last April. The leg up since has I think been all about the potential sale of Porsche shares....makes a huge amount of sense and allows VW to captures some of that value that is trapped on its balance sheet.