(Bloomberg) — The initial public offering of iconic sports-car maker Porsche, which is poised to be one of Germany’s biggest-ever IPOs, is missing the country’s biggest bank, Deutsche Bank AG.
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Volkswagen AG picked an all-American lineup, snubbing European banks, to lead the planned share sale, which could value Porsche at as much as 90 billion euros ($100 billion), according to people familiar with the matter.
The choice of Goldman Sachs Group Inc., Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. as joint global coordinators is another reminder of just how strong Wall Street’s grip on European equity capital markets has become. U.S. banks have taken the top five underwriting slots on equity offerings in the wider Europe, Middle East and Africa region for the last two years, data compiled by Bloomberg show.
VW’s decision in particular to omit Deutsche Bank, long a mainstay in the boardrooms of Germany’s blue-chip companies, surprised both the advisers that won the coveted top-line mandates and those that pitched and missed out, the people said, asking not to be identified discussing private matters.
Video Message
Deutsche Bank made a big push for a lead role. Its Chief Executive Officer Christian Sewing, who’s credited with stabilizing the German lender over the past several years, got involved with a pre-recorded video message to VW, the people said.
Other CEOs including JPMorgan’s Jamie Dimon and Goldman’s David Solomon also filmed messages to go with their firms’ pitches, the people said. Goldman’s pitch included a video montage of bank employees waxing lyrical about how they love their Porsches, the people said.
Sewing has been known to turn up at pitches for blockbuster mandates, showing his dedication to helping secure headline transactions after years of restructuring. A strong equity capital markets business and focus on core regions are key pillars of the leaner investment bank that Sewing has presided over since taking charge.
BNP Paribas SA, one of VW’s biggest lenders, as well as Barclays Plc, also missed a top spot. It wasn’t just European banks that came up short, as Morgan Stanley also pitched.
While Frankfurt-based Deutsche Bank is likely to land a joint bookrunner role, according to the people, that may be little consolation. Leading such a large listing, and clinching a bigger share of the fee pool, will have been particularly sought after, given the moribund market for European IPOs.
Board Links
Several American firms chasing the deal were convinced that a listing of such a well-known German brand could never go ahead without a local bank — and Deutsche Bank, even after drastic restructuring, remains the only homegrown global player in Europe’s largest economy.
Deutsche Bank itself may well have thought the same. Members of its supervisory board include former VW executive Frank Witter and Sigmar Gabriel, ex-prime minister of the German state of Lower Saxony, which is the carmaker’s second-biggest shareholder.
Depending on the valuation it seeks, the Porsche IPO could end up as Germany’s biggest ever, surpassing Deutsche Telekom AG’s $13.1 billion share sale in 1996, data compiled by Bloomberg show. Some advisers reckon the firm could achieve a market capitalization north of 100 billion euros, based on its growth potential and progress on electrification, as well as trading multiples of other luxury carmakers.
Family Influence
In preparation for the listing, Volkswagen plans to split Porsche’s equity equally between common shares and preferred stock. It would then sell as much as 25% of the non-voting preferred shares to outside investors through the IPO.
Other firms are getting in on the action in different ways. PJT Partners Inc., the U.S. boutique adviser founded by Paul Taubman, is advising holding company Porsche Automobil Holding SE’s supervisory board, which is controlled by the billionaire Porsche and Piech families. JPMorgan — alongside its role on the IPO — has also been helping the family holding company with financing, people with knowledge of the matter said.
Representatives for VW and the banks declined to comment or didn’t immediately respond to queries.
Europe’s largest automaker is planning a listing of a minority stake in Porsche, one of its most coveted assets, in the fourth quarter to help finance the industry’s biggest push into electric cars and boost its valuation. If VW goes ahead as planned, the IPO would allow the Porsche and Piech family to claw back direct influence in what used to be their family enterprise.
Read more: Porsche SE Plans to Maintain VW Stake in Wake of IPO
(Updates with details of other banks’ pitches in sixth paragaph, context on German IPO market in 12th paragraph)
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