Oliver Blume’s collection of works could generate governance problems and harm the luxury brand’s IPO.
Oliver Blume, announced last week as the new CEO of Volkswagen, will take over the role of CEO of Porsche AG. The news was confirmed by VW itself. causing some discomfort among the Group’s investors.
– Want to understand more about car manufacturers’ strategies? Click here and find your spot at #ABX22 – The Automotive Business Experience
Salseiro happens because of the IPO of Porsche, one of Volkswagen’s most valuable assets. Although the IPO is subject to the approval of the board of directors, everything was fine with the main shareholders of the Group. Or it was.
A study conducted by Bernstein Research shows that almost 75% of investors do not accept Oliver Blume’s double change. For them, Porsche’s executive maintenance erases the freedom the luxury brand would have had after going public.
Of the 58 investors surveyed by Bernstein, 42% are against a Porsche IPO. A tough fight, as 41% believe that, even with Blume on both sides, the IPO should go ahead. The operation, it is worth considering, would raise almost € 20 billion.
Porsche IPO: Governance problems are an obstacle
For Volkswagen Group shareholders, the listing of Porsche in its current form may be affected by corporate governance issues. To Reuters, a representative of Deka Investment, one of VW’s biggest investors, was emphatic when he said that Oliver Blume “cannot take care of everything”. The executive went further and opined that such a move is the result of “mismanagement at Wolfsburg” and is “toxic” for the luxury brand’s IPO.
“Two powers can only exist temporarily, in an emergency. It won’t work for long,” Ulrich Hocker, a member of the association representing retail investors, told Reuters.
“We trust Blume to manage the group, but it is difficult to imagine that he will be able to carry out the dual role of managing interests as the chief executive of Porsche and the group for a long time,” added Hendrik Schmidt, an expert in corporate governance at DWS property manager.
Even with the panic, no one believes in the postponement of Porsche’s IPO – scheduled for the fourth quarter. For this reason, many speculate that the Volkswagen Group will replace Blume with Lutz Meschke, who currently oversees the sports car brand’s finance department. Meschke has been with Porsche since 2009 and at the beginning of 2022 he extended his contract with the company for another five years.
THE the dismissal of Herbert Diess as Group CEO it is also resented by Volkswagen investors. For 63% of those surveyed by Bernstein Research, the executive’s departure will have a negative impact on the company’s stock.
Considered an outsider, coming from BMW, Diess faced a dysfunctional environment since his arrival at the Volkswagen Group. Not surprisingly, after losing the support of the Porsche-Piëch family, an important part of the company’s committee, the CEO received the fatal invitation to withdraw.
A key figure in Volkswagen’s electrification process, Diess led the organization through a difficult period, immediately following the Dieselgate scandal caused by the company’s fraud in controlling the production of millions of cars sold worldwide. The executive has a contract with VW until 2025. According to a source heard by Reuters, he will remain at the Group in an advisory role. Something like Queen Elizabeth of Wolfsburg.