Money Matters - Simplified

Porsche still in talks with QIA

Founded in 1931 by Ferdinand Porsche, the German manufacturer of luxury automobiles is scouting for an investor to inject fresh capital in the automaker

Dubai, June 17: Qatar will reveal the outcome of the parleys with Porsche SE (Xetra: PAH3, FWB: PAH3), which are primarily centered around the size of the stake that the government will buy in the besieged German sports car maker, in two to three weeks.

Sheikh Hamad bin Jassem al-Thani, Qatar’s prime minister, reportedly said, "We are still discussing the stake. According to the legal agreement between the two parties, neither of them is allowed to disclose any information about it before it is sealed."

The Prime Minister refused to confirm reports that the Qatar Investment Authority (QIA) was eying a one-fourth stake in Porsche. The QIA is the primary investment vehicle for the Qatar government.

Members of the Porsche and Piech families that control the automaker hope that Qatar would inject billions by way of fresh capital in the Stuttgart-based company.

No family disagreement
The German automaker dismissed reports that Ferdinand Piech, a major shareholder in Porsche, stalled a decision for Qatar to take a stake in the ailing company. The company said in a statement, "The family unanimously supports the talks with an investor."

"There is also a consensus within the family that the demand from Wolfsburg that Qatar must first hold talks with Volkswagen management and labor before buying a stake wholly lacks any basis. Qatar is purely an issue for the controlling families and will only be dealt with by Porsche," the statement added.

The debt factor
Porsche has been seeking an investor to bail it out ever since the automaker took over 9 billion euro ($12.5 billion) net debt to enhance its stake in Volkswagen AG (FWB: VOWG) to 75 percent. The latter had rejected the proposal as Porsche's finances were in a mess. As on date, Porsche owns nearly 51 percent of Volkswagen.

The interest of the Gulf Arab sovereign wealth funds and investment companies in foreign organizations makes sense as they look for investment opportunities to get more returns on their already inflating oil incomes.