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Geely’s Volvo cars filing for IPO

China’s Zhejiang Geely Holding Owns the Swedish carmaker Volvo Cars. It said on Monday that Geely’s Volvo cars is filing for IPO and will list on the Nasdaq Stockholm exchange. This transaction is expected to raise up to $2.9 billion (25 billion Swedish kroner).

The deal could value the automaker at up to $25 billion. 

What Geely’s Volvo cars filing for IPO would mean for the company?

Geely will sell a certain number of its shares, according to a press release. However, Volvo said the Chinese company will remain its largest shareholder following the deal. Its Swedish institutional shareholders, Folksam and AMF, will also remain.

The Swedish automaker said that its relationship with Geely and other companies in Geely’s ecosystem allows it to benefit from sharing existing and future technology, coordination of procurement, and economies of scale to achieve synergies, competitiveness, and deliver long-term value.

FILE PHOTO: An employee at a Volvo car dealer, wearing a protective mask is seen in a showroom, in Brussels, Belgium, on May 28, 2020. REUTERS/Yves Herman/File Photo

Plans with the IPO money

Volvo has already made a voluntary commitment to shift its entire lineup to electric by 2030. With 50% of its sales volume to be electric by the middle of the decade. The automaker said that the proceeds from the IPO will go towards accelerating its transition to full electric. Even in case of a weakening market environment.

The news reinforces just how far Volvo has come over the past 11 years after Ford Motor sold it at a major loss to Geely for $1.8 billion in 2010. Since its purchase by Geely, Volvo has undergone a major expansion. It built two vehicle assembly facilities in China and a factory in South Carolina. In June, Volvo said it would invest another $118 million into its South Carolina plant.

The sales clearly reflect the turnaround. On Friday, Volvo reported a 17.6% increase in sales for the first nine months of this year, compared to the same period in 2020.

Volvo’s intention to go public comes on the heels of news from EV maker Polestar that it would merge with a special purpose acquisition company in a deal valued at $20 billion. Geely also owns Polestar, an arm of Volvo Car’s electric brands. It seems likely that the timing is not a coincidence; according to WSJ reporting, the Polestar SPAC assigned a value of around $10 billion to Volvo’s stake in the company, paving the way for Volvo’s IPO.

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