Volkswagen’s powerful works council has raised the possibility that the automaker might sell more shares of its Porsche brand, which is expected to go public later this month in one of the biggest IPOs in the world. Germany.
The German automaker has come under fire from some investors for plans to sell just 12.5% of Porsche, its most profitable brand, in a long-awaited IPO that is expected to value the luxury automaker between 70 and 75 billion euros.
Daniela Cavallo, who as head of VW’s works council wields significant influence over the company, said: “I think Volkswagen will benefit from [the IPO] at the end.”
The product would give the company “additional flexibility in terms of [the company] can finance the transformation” from the era of the combustion engine to that of the electric vehicle, she told the Financial Times.
“This includes the hypothetical possibility of issuing other [non-voting] long-term stocks, if necessary,” she said, but stressed that such a sale “is not planned” at this time.
As well as controlling half of VW’s 20 supervisory board seats, the works council, which represents the interests of the company’s 300,000 German workers, also enjoys a loose alliance with board members representing the company. State of Lower Saxony, a major VW shareholder.
Cavallo’s comments are the most open any senior VW official has been to the option of one day selling more Porsches to investors. VW executives and bankers working on the IPO have dismissed the prospect of further stock sales. “We are ruling out any further investments at this time,” chief financial officer Arno Antlitz told reporters earlier this month.
Porsche’s IPO comes as VW takes on the financial burden of reinventing the company in the age of electric vehicles. The company has already committed more than 52 billion euros to the development of battery-powered vehicles and will spend more to manufacture battery cells.
No discussion is underway of further stock sales, which were not “currently an option”, Cavallo said, but added: “Nobody knows if we might ever think of this option – but we we could do it, if necessary. And that’s positive.”
Volkswagen declined to comment.
Porsche’s IPO “brings flexibility for the future and that is, after all, why we accept this from the employee side,” Cavallo said, pointing out that the reason the works council supported the float was why he also supported VW Traton’s truck unit partial flotation in 2019.
As part of the IPO, around 130,000 VW workers in Germany, mainly represented by the works council, will receive a one-off payment of €2,000.
The Porsche-Piëch families, VW’s largest shareholders, will also buy 12.5% of the Stuttgart-based company that bears the name of their patriarch – and their stake will include voting rights.
The Qatar investment vehicle, already a major VW shareholder, is expected to buy around 2.5% of the non-voting shares offered in the IPO, while Norges Bank, T Rowe Price and the sovereign wealth fund of ‘Abu Dhabi also pledged to buy stakes.
Porsche Chief Financial Officer Lutz Meschke told reporters earlier this month that only “serious geopolitical problems” would prevent the IPO from going ahead, despite the deteriorating global economic outlook.
Cavallo took a more cautious note, saying VW “should see how this phase actually unfolds, if we actually implement the IPO at the end.”
“I hope for the best because the returns [from investors] is positive at the moment, even though there is volatility in the markets,” she said.
“I believe that ultimately the [Porsche] the workforce will benefit because Porsche has an impressive track record.