Struggling German carmaker Porsche could be about to take investment from the sovereign wealth fund of Qatar, according to German magazine Focus. Apparently Porsche boss Wendelin Wiedeking has persuaded the Qatari emir Sheikh Hamad bin Khalifa al-Thani to buy a stake via his Qatar Investment Authority vehicle, with a deal likely to be confirmed by the middle of the month. Since Wiedeking urgently needs to reduce the crippling €9bn debt pile he’s accumulated as part of the daring reverse takeover of Volkswagen, this would be a big boost. And given that Qatar is good at producing oil and Porsche’s sports cars are good at guzzling it, they’ve clearly got interests in common.
According to Focus, there are two options on the table. Either the QIA buys Porsche’s options on a 24% stake in Volkswagen, giving the latter a big new shareholder and the former an immediate injection of cash; or it buys a stake in Porsche itself (and thus Volkswagen indirectly, of which Porsche owns 51%). This is apparently much more complicated because it would need sign-off from shareholders, but at least the Emir would end up owning a chunk of the sports car brand too (although we’re sure he’s not short of cash for the odd 911 or two). By all accounts, Volkswagen would have no objections either way - although we're guessing that Wiedeking, a notorious control freak, would prefer the first option. After all, there's no room for back-seat drivers in a Porsche.
Porsche certainly needs to do something. The sports car maker managed to quadruple its profits in the six months to January to €7.3bn by cleverly playing the stock market, secretly accumulating a control stake in its much larger rival Volkswagen and fleecing a load of unsuspecting hedge funds (and guess how much sympathy they got). But its attempts to push through a merger have since hit the skids, with Volkswagen complaining about Porsche’s strategic vision (or lack thereof) and its ever-mounting debts. So far Porsche has raised over €10bn to refinance its loans, but it’s still seeking an extra €1.75bn from the German government to tide it over.
In other words, it could do with a deep-pocketed backer – and the QIA certainly fits the bill. A sovereign wealth fund set up to invest some of Qatar’s proceeds from oil and gas sales, you may recall it trying to buy Sainsbury’s back in 2007. On that occasion it was eventually forced to walk away – but on this occasion, it’s dealing with a selling party that desperately needs a buyer…
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