Volkswagen shareholder Porsche SE eyes defence, infrastructure for new investments

By Victoria Waldersee

BERLIN (Reuters) -Porsche SE, Volkswagen's largest shareholder, is eyeing defence and infrastructure as possible new long-term investment areas, it said on Wednesday, adding there were no plans to sell shares in Volkswagen or Porsche AG.

Germany's parliament this month approved plans to create a 500-billion-euro ($540 billion) infrastructure fund and allow higher spending on defence, sending shares in construction and defence companies soaring as investors hoped the spending splurge could revive economic growth.

New investments need to generate financial returns to contribute to dividends, and give insights into new technologies that could boost the competitiveness of Volkswagen and Porsche AG, said Lutz Meschke, Porsche SE's board member for investment management and a former finance chief at Porsche AG.

Porsche SE, controlled by the Porsche and Piech families, is Volkswagen Group's top investor with 31.9% of shares and 53.3% of voting rights. It also owns 12.5% of luxury carmaker Porsche AG, with much of the rest held by the Volkswagen Group.

Board chairman Hans Dieter Poetsch denied rumours that Porsche SE was planning to sell shares in either of its core holdings but said that it could "certainly imagine" adding a new core investment.

The board proposed a dividend of 1.91 euros per preference share, down from 2.56 euros last year, attributed to the lower dividend inflow from Volkswagen, which reported a 15% drop in operating profits last year.

The holding company said that the programmes underway at Volkswagen and Porsche to cut costs had significant potential to boost profitability but that the companies needed to focus on "rigorous implementation."

($1 = 0.9273 euros)

(Reporting by Victoria Waldersee. Editing by Tomasz Janowski and Mark Potter)