Volkswagen mulling £3.5bn raiser to fund Porsche deal

Carmaker Volkswagen was today looking at raising 4 billion (£3.5 billion) of new funds as part of its plan to buy Porsche.

"VW is planning to buy Porsche's sports car business as fast as possible and, to finance this, they are thinking about strengthening their capital base," said a source.

VW, Europe's largest carmaker, will start looking into Porsche's books in the coming days and is understood to be keen to keep its solid credit rating even after the acquisition. Rating agencies fear high levels of debt at Porsche, thought to be in the region of 14 billion, could damage VW's credit profile. A 4 billion fundrasing could ease these fears.

Porsche aimed to buy VW but its plans were reduced to tatters last week.

Chief executive Wendelin Wiedeking was forced to quit the company he has led for 16 years with a 50 million payout.

Reports today said VW would acquire initially a 50% stake in the sports car maker and purchase the rest in 2011. The acquisition price is estimated at 8 billion.