By Dhirendra Tripathi

Investing.com – Shares of Volkswagen (DE:) rose 4.5% in German trading on Tuesday after the company said it was considering an IPO Porsche .

The IPO of Volkswagen’s most profitable asset is expected to boost the valuation of the world’s second largest automaker and help it take over Tesla (NASDAQ:) in the electric vehicle market.

VW and the family holding company Porsche Automobil Holding have negotiated a framework agreement that is intended to form the basis for preparing for a possible IPO, the company said in a statement.

“The conclusion of the framework agreement is subject to the approval of the Executive Board and Supervisory Board Volkswagen AG (OTC:). A final decision has not yet been made,” said Volkswagen.

Europe’s largest automaker has a convoluted shareholder structure that limits its ability to raise fresh equity. It relies on its own cash, which the company generates, or on bonds and loans. A Porsche listing will give him a new avenue to raise funds.

The listed Porsche Automobil Holding (DE:) is separated from the sports car business. It was created more than 10 years ago when Porsche was trying to take control of a much larger VW. The attempt imploded when the 2008 financial crisis led to a financial crisis and the sports car business came under the VW Group and Porsche SE remained a separate legal entity.

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