Volkswagen AG has lined up commitments from anchor investors including the Norwegian sovereign wealth fund as it pushes ahead with a listing of its Porsche AG unit, people with knowledge of the matter said.
Norges Bank Investment Management and Dietrich Mateschitz, the billionaire founder of energy drink brand Red Bull, have agreed to buy stock in what’s set to be one of Europe’s largest initial public offerings, the people said. VW is discussing seeking a valuation of around 70 billion euros ($70 billion) to 85 billion euros, the people said, asking not to be identified because the information is private.
The company aims to finalise a price range for the Porsche offering over the weekend and start taking investor orders early next week, the people said. VW is telling fund managers that preliminary investor interest is already enough to cover the deal several times over, one of the people said.
Big-name investors including T Rowe Price Group Inc. have already indicated interest in subscribing to the IPO, Bloomberg News reported last month. Qatar Investment Authority has made a preliminary commitment to buy a 4.99 per cent stake, VW said this month.
Deliberations are ongoing, and details of the share sale could still change, the people said. Representatives for VW, Porsche and Norges Bank Investment Management declined to comment. A spokesperson for Mateschitz didn’t immediately respond to emailed queries.
The listing is set to reopen European markets, which have been largely shut for the most part of the year with investors shying away from equity offerings due to an energy crisis following Russia’s attack on Ukraine, higher interest rates and elevated inflation.
IPO investors will be sold preferred shares in Porsche that don’t carry voting rights. The billionaire Porsche and Piech clan, which controls VW, is separately buying common stock that will give it a blocking minority stake in Porsche.
Analysts at HSBC Holdings Plc, which doesn’t have a role on the offering, wrote in a note Tuesday that Porsche is worth just 44.5 billion euros to 56.9 billion euros. The carmaker’s pricing power may wane as supply recovers over the next two years, while demand may take a hit under a recessionary environment, analysts including Edoardo Spina wrote.
Besides volatile markets, Porsche is also contending with corporate governance concerns. Some investors have voiced doubts about the surprise appointment of the unit’s chief executive to the helm of VW, which will continue to hold the bulk of its shares.