Porsche CFO envisions a VW ‘super group’ that could top Ferrari


News / Monday, October 15th, 2018

WEISSACH, Germany – Porsche can be worth a fortune if it is mentioned in the Ultraluxury brands of the Volkswagen Group, said Finance Chief Lutz Meschke.

By applying the same stock markets as Ferrari, Meschke said that shares in a car company led by Porsche and including Bentley, Bugatti and Lamborghini could easily achieve a market capitalization more than three times the size of the Italian supercar maker, which is about 19 billion worth is euro ($ 22 billion).

If it hovered, VW's "Super Premium Brand Group" would be the third car manufacturer to have recently named the next Chinese premium electric car manufacturer Nio and the British luxury automaker Aston Martin in September and October.

70 billion euros

"We would probably be seen as a luxury goods manufacturer and the multiples are totally different compared to a normal premium brand," Meschke told reporters at Porsche's development center here on Friday. "A valuation of 60 billion to 70 billion euros [$70 billion to $81 billion] it certainly does not sound like a piece. "

When asked about the analysts he estimates that such a superpremiegroep could be a hundred billion euros ($ 11 billion), Meschke said that was also conceivable.

In a Porsche statement on Monday, the company explained that Meschke explained the positive effects that such a market driver could have during the current transformation of the industry. The company said it was "currently not pursuing full or partial listing" and that any decision in favor of an IPO of shares would be taken by VW Group.

Last month VW Group CFO Frank Witter was asked if the automaker would be open for the sale of shares in the super premium group. He did not say no to the option.

Meschke said that equity investors in global car companies, such as VW Group or Daimler, can benefit most from a partial listing of their subsidiaries, as evidenced by the spinoff of Fiat Chrysler Automobiles in Ferrari in January 2016. The VW Group as a whole is estimated at around $ 80 billion, which means that investors mainly pay for holding shares in the premium brands of the company.

"When Ferrari became public, Fiat Chrysler itself saw a sudden increase in value," said Meschke.

Investors would welcome a public offer, he believes, because it would indicate a company that is as diversified as the VW group is willing to flush away unnecessary weight to tackle its cumbersome structure.

Porsche & # 39; deserves its own stage & # 39;

Analyst firm Evercore ISI welcomed Monday Meschke & # 39; s remarks and named Porsche "a gem that deserves its own podium." The investment bank estimated that the sum of all VW Group parts had a combined value of more than $ 174 billion, which is more than twice the current market capitalization. Evercore ISI estimated that Porsche alone could be estimated at $ 52 billion to $ 94 billion.

"Every management team with a basic knowledge of economics and capital would explore the possibility of reclassifying Porsche AG," Evercore ISI said in a research note. "From a perspective of governance, growth and profitability, more autonomy and accountability, the VW Group would be a better company, and separately listed legal entities would also offer VW more flexibility."

Potential benefits

This would achieve different things. Firstly, the underlying weaknesses of VW's core brand, which were somewhat hidden by the gains of a premium brand such as Porsche and Audi, would be more conspicuous. The result would be a constant but healthy pressure on the organization to continuously reduce costs in the rest of the company.

By concentrating on its volume brands, the VW Group shares could also be valued higher. Investors usually attach a premium to a company with a clear operational focus. These companies can be more easily compared to other "pure play" rivals than a conglomerate such as the VW Group, which sells everything from motorcycles to heavy trucks to marine engines.

Finally, it would make the VW Group more attractive for potential partners, both from the automotive industry and from outside, such as technical companies.

Meschke indicated that he had discussed the issue of the stock exchange listing with company managers at the VW Group headquarters in Wolfsburg, as well as the Porsche and Piech families that hold a majority of the voting shares in the automaker.

"You can assume that I also explain the benefits within the group," he said.

Prior to the global financial crisis, Porsche was an independent, listed company owned by the Porsche and Piech clans. It was sold to the VW group in a two-step process in 2009, in what was initially considered a full capitulation after Porsche had almost gone bankrupt by buying its larger German partner.