BERLIN -- Volkswagen Group is targeting a valuation of up to 75 billion euros ($75 billion) for luxury sports-car maker Porsche -- below an earlier top-end goal of as much as 85 billion euros, with the deal going ahead at a time of deep market upheaval.
VW Group will price preferred shares in the flotation of Porsche AG at 76.50 euros to 82.50 euros per share, the automaker said on Sunday, translating into a valuation of 70 billion to 75 billion euros. At the upper end of the range, it would become Europe's third largest IPO on record, according to Refinitiv data.
"The Porsche IPO will most likely be a success... investors are queuing up. If the Porsche IPO goes well, one could imagine placing other parts [of Volkswagen] such as Audi on the stock exchange," auto expert Arndt Ellinghorst of data analytics firm QuantCo said.
The subscription period for private and institutional investors is expected to run from Sept. 20 to Sept. 28, with shares offered to private investors in Germany, Austria, Switzerland, France, Italy and Spain. Trading will begin on the Frankfurt Stock Exchange on Sept. 29, VW said.
Total proceeds from the sale will be 18.1 billion to 19.5 billion euros. VW Group has said that proceeds from the IPO will help the automaker with financing its EV transition and investments in software.
During meetings with potential investors, VW pitched the listing as a chance to invest in a company that combines the best of carmaking rivals like Ferrari and luxury brands such as Louis Vuitton.
While Ferrari and Porsche both target wealthy buyers, Ferrari remains in a league of its own boasting industry-leading margins despite delivering a fraction of Porsche’s 300,000 annual sales.
At the mid-valuation point for the preference shares, the IPO would value Porsche at 10.2 times earnings before interest, tax, depreciation and amortization, according to Jefferies. This compares to Ferrari's EBITDA multiple of 23.1 times.
Still, Porsche's upper valuation range almost matches VW Group's total market value -- comprising Audi, Skoda, the VW brand as well as Seat -- of 88 billion euros.