Volkswagen in talks with pre-IPO investors for battery unit

By Emma-Victoria Farr and Jan Schwartz

FRANKFURT/HAMBURG (Reuters) – German carmaker Volkswagen is in talks with investors to join its battery division ahead of a possible partial initial public offering (IPO) of the subsidiary, two people familiar with the matter told Reuters.

The idea is to bring in investors ahead of the IPO so that Volkswagen can assess how the division – named PowerCo – might be valued in a possible IPO, the sources said, adding that Volkswagen was working with advisers on a potential transaction structure.

The first ideas are being exchanged but deliberations are not yet concrete, said one of the sources.

Volkswagen declined to comment.

Due to the proceeds it received from the successful IPO of its sports car maker Porsche, Volkswagen does not feel under pressure to raise additional funds for its transformation to electrification, the second source said. .

During Porsche’s first day of trading, Volkswagen chief financial officer Arno Antlitz said the automaker plans to form strategic partnerships within one to two years as a step towards an eventual listing of its PowerCo battery business. .

Volkswagen has set aside 20 billion euros ($21 billion) to invest in its battery cell business, with the PowerCo unit managing its battery production and research, from mining to recycling and projects including systems energy storage.

Former Volkswagen CEO Herbert Diess floated the idea of ​​a listing in May last year as a way to fund the automaker’s battery expansion plans.

Volkswagen’s US network of charging stations, Electrify America, in which Siemens has invested a low triple-digit amount, could serve as a model for investor participation, the second source said.

In September, Volkswagen announced a joint venture between PowerCo and Belgian circular materials technology group Umicore to establish a large-scale supply chain for sustainable battery materials.

The partnership will invest three billion euros in new production capacity, with the aim of producing battery materials for more than two million fully electric cars per year by the end of the decade.

($1 = 0.9653 euros)

(Reporting by Emma-Victoria Farr in Frankfurt and Jan Schwartz in Hamburg, editing by Christoph Steitz and Elaine Hardcastle)

Robert D. Coleman