Volkswagen’s price is low, but the battery business will help, says the shareholder

A Volkswagen logo is seen at a Mexican factory as workers protest to demand approval of a recent agreement with management at a Mexican factory on August 31, 2022 in Puebla, Mexico. REUTERS/Imelda Medina

BERLIN, Sept 2 (Reuters) – Lower Saxony, Volkswagen’s ( VOWG_p.DE ) second-largest shareholder, sees the carmaker as undervalued but believes its growing battery business could boost its value, the state’s prime minister said on Friday.

As Volkswagen and its largest shareholder Porsche SE prepare to partially list sports car maker Porsche to raise finance, Stefan Weil says he believes the group is far above valuation, saying now is not the time to consider a capital increase.

“Volkswagen has incredible potential … there’s a lot of sense that the moves it’s making around batteries will sustainably increase the value of the group,” Weill said during the campaign.

Lower Saxony, home to Volkswagen’s global headquarters, owns 11.8% of Volkswagen and controls 20% of the voting rights.

Volkswagen’s market capitalization topped 100 billion euros ($99.89 billion) in March 2021 as the carmaker unveiled ambitious electrification goals, but fell to 82.9 billion euros this year amid a broader European recession.

Former CEO Herbert Diess said in December that the automaker plans to build six factories in Europe and two in North America, with its growing battery division in 2018. They said they expect to generate 20 billion euros in revenue by 2030.

Talks so far have gone smoothly for the Porsche AG listing, which could begin next week, Weil said, adding that the state is committed to maintaining its stake in the Volkswagen Group.

Investors estimate that Porsche alone could be valued at €60-85 billion in the listing, although some suggest that unfavorable market conditions mean it could land at the lower end of that range. Read more

Qatar, the largest shareholder after Lower Saxony with a 10.5% stake, will be a strategic investor in Porsche AG’s preferred shares in the IPO case, Volkswagen said in February. Read more

Reporting by Andreas Rinke, Writing by Victoria Waldersee Editing by Paul Carrell and Nick Ziminski

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