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On January 31st, Federal Reserve Chairman Mohamed Mussala stated on Friday that he was reluctant to support further interest rate cuts given that inflation had consistently remained above the Feds 2% target. Mussala said he agreed with the Feds decision this week to keep interest rates unchanged, arguing that the Feds target rate of 3.5% to 3.75% was no longer high enough to significantly dampen the economy. He believes that persistent price increases should prevent the Fed from lowering rates to support the economy. Mussala stated, "Given that inflation is above target and the risks to the economic outlook are broadly balanced, I dont think its appropriate to lower interest rates into an accommodative range at this time." Mussala also pointed out that attempting to alleviate labor market pressures by lowering short-term interest rates controlled by the Fed could be counterproductive. He said such a move could trigger concerns about future inflation and push up long-term interest rates, which are a key factor determining mortgage costs and business borrowing costs.Federal Reserves Mossallem: Economic tailwinds are expected to boost economic growth in 2026.Federal Reserves Mossala: The risk of a sharp decline in the job market has diminished.Federal Reserves Mossalim: Inflation is expected to fall to around 2%, but he believes it may remain above 2% for an extended period. Further rate cuts could exacerbate inflation expectations.Federal Reserve Chairman Mossallem: The economy is expected to continue to grow at an above-trend pace, driven by credit conditions and fiscal policy.

Volkswagen wants 75 billion euro valuation in blockbuster Porsche IPO

Charlie Brooks

Sep 19, 2022 10:42

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Volkswagen revealed on Sunday that it aims to value premium sports car maker Porsche at up to 75 billion euros ($75,1 billion) in what will be Germany's second-largest initial public offering (IPO) in history.


Volkswagen (ETR:VOWG p) will price preferred shares in the float of Porsche AG between 76.50 and 82.20 euros per share, the manufacturer revealed, which corresponds to a valuation between 70 billion and 75 billion euros.


At the upper end of the range previously reported by Reuters, according to Refinitiv figures, it would be the third largest IPO in Europe's history. Volkswagen said that trading on the Frankfurt Stock Exchange will resume on September 29.


In conjunction with the IPO, 911,000,000 Porsche AG shares will be divided into 455.5,000,000 preferred shares and 455.5,000,000 common shares. During the IPO, investors will get up to 113,875,000 shares of preferred stock without voting rights.


Volkswagen stated that sovereign wealth funds from Qatar, Abu Dhabi, and Norway, along with mutual fund company T. Rowe Price, will purchase up to 3.68 billion euros in preferred shares as cornerstone investors.


Volkswagen's Chief Financial Officer and Chief Operating Officer, Arno Antlitz, commented, "We are in the final stages of planning Porsche's initial public offering, and we appreciate the commitment of our cornerstone investors."


Porsche SE will obtain 25% plus one ordinary share in the sports car brand, which do carry voting rights, for the price of the preferred shares plus a 7.5% premium.


According to a second release, Porsche SE, the holding firm controlled by the Porsche and Piech families, would finance the acquisition of the ordinary shares with up to 7.9 billion euros in borrowed cash.


Between 18,1 and 19,5 billion euros will be realized from the transaction. Volkswagen will propose distributing 49% of total profits as a special dividend to shareholders in early 2023 if the IPO is successful, and will host an extraordinary shareholder meeting in December.


On Monday, following the release of a stock market prospectus, institutional and individual investors will be able to subscribe for Porsche shares.

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