June 17, 2021

Gp Delivers

The excellent automotive artisans

Geely weighs IPO of $20 billion Volvo Cars

China’s Zhejiang Geely Holding Group Co. is considering reviving plans for an initial public offering of its Volvo Cars unit that could value the business at around $20 billion, people familiar with the matter said.

Closely held Geely Holding has been speaking with potential advisers about selling shares in Volvo Cars as soon as this year, the people said, asking not to be identified because the information is private. It is considering potential listing venues including Stockholm and Amsterdam, the people said.

Automakers have been searching for ways to fund the enormous investments needed for the seismic shift toward electric vehicles. In February, Geely Holding scrapped plans to merge Volvo Cars with the Chinese group’s publicly traded unit, Geely Automobile Holdings Ltd. It decided instead to bundle the two firms’ powertrain operations into a new company and team up on technology development.

Early Stage
Deliberations are at an early stage, and details such as the potential valuation could change, the people said. A representative for Geely Holding declined to comment. A spokesperson for Volvo Cars said the February agreement “enables both companies to explore respective capital market options to realize shareholder value.”

“Volvo Cars will be reviewing various options, which could include plans for a potential IPO and stock market listing,” the spokesperson said. “As yet, no decisions have been taken. Appropriate regulatory disclosures will be made in due course, should they be required.”

Geely Holding previously pursued an IPO of Volvo Cars in 2018. It shelved the plans after investors balked at its proposed valuation of as much as $30 billion, people familiar with the matter said at the time.

Companies have raised $220 billion from IPOs globally this year, according to data compiled by Bloomberg. That’s up almost sixfold on the first quarter of 2020, when the onset of the COVID-19 pandemic grounded listings.

Geely Holding acquired the maker of the XC90 crossover from Ford Motor Co. for $1.8 billion in 2010. The Swedish brand prospered under the new ownership, keeping much of its independence in running global operations. In 2020, Volvo sold more than 660,000 cars, with China its largest market followed by the U.S., Sweden and Germany.

Global Ties
An IPO of Volvo would add to the globe-spanning ties and partnerships in vehicle manufacturing of Li Shufu, Geely Holding’s founder and chairman. Li is Daimler AG’s biggest shareholder and owns the second-largest stake in Volvo AB, the Swedish truckmaker, as well as control of sports-car maker Lotus and London’s iconic black cabs.

This year alone, Li has forged ties with search-engine heavyweight Baidu Inc., Apple Inc.’s Taiwanese manufacturing partner Foxconn Technology Group and Tencent Holdings Ltd., to keep pace with the quickening shift to electrification and more software in cars.

Volvo this month set an ambitious goal to only sell cars powered by a battery from 2030. The pledge, which goes even further than plans announced by Volkswagen AG or BMW AG, puts Volvo on the trajectory of EV-only newcomers. Their soaring valuations — with China’s Nio Inc. roughly on par with BMW — have been a wake-up call to longstanding manufacturers.

Geely Holding, China’s biggest manufacturer of local-branded conventional automobiles, has also been plowing resources into electric vehicles. Geely and Volvo’s jointly-held brand Lynk & Co. will start shipments to Europe in April of its China-made 01 utility vehicle.

Geely also controls electric-vehicle maker Polestar, which is exploring options to go public as soon as this year in the U.S. or Hong Kong, Bloomberg News reported earlier Wednesday.

Polestar, which is jointly owned by Volvo and Geely, launched the electric Polestar 2 in 2019 to challenge Tesla Inc.’s Model 3.