Porsche AG (ETR:P911) shares made a strong start to its first day of trading following its IPO on Thursday by defying volatile markets to value the company at an eye-catching €78.5bn.
The listing, which was Germany’s second-largest market debut ever behind Deutsche Telekom in 1996, was trading up 4.6% from the issue price at €82.50.
Volkswagen, which owns Porsche, priced the luxury carmaker’s shares at the top end of the suggested range and raised €19.5bn from the float to aid the company’s electrification transition.
"There's a lot to like about the company, with its aggressive electrification plans, expected strong cashflow generation and premium brand positioning in the market,” Chi Chan, portfolio manager of European equities at Federated Hermes Ltd, said.
"However, it is coming to market at a time of unprecedented turmoil and consumer confidence is falling."
Porsche AG (ETR:P911)’s valuation rose to €78.5bn, not far off the market cap of its parent Volkswagen, which is valued at approximately €81bn.
Its impressive start came despite weak global stock markets and sky-high German inflation figures.
Volkswagen insisted the volatility was exactly the reason for the listing, with fund managers desperately in need of a stable and profitable business to plough their money into.
Shares in Volkswagen and Porsche SE, which owns a minority of Porsche AG (ETR:P911), were down roughly 3.5% and 8.0% respectively, with experts saying investors were simply moving their investments from one to the other.
Porsche’s listing came at a time where European flotations have faced their worst year since 2009, with investors worried about potential worldwide recessions on rocketing prices, higher interest rates and the Ukraine war, which is heavily disrupting supply chains.
Companies in the region raised approximately US$44bn from equity capital market deals up to Tuesday, Refinitiv data showed, but just US$4.5bn of that was from IPOs.