Volvo to list shares next week targeting $23bn valuation

Volvo Cars will guidelines its shares subsequent week in an offering which may well worth the Chinese language language-owned premium carmaker at as a lot as $23bn.

The Swedish carmaker is anticipating to spice up as a lot as SKr34bn ($3.9bn), with its shares ensuing from start shopping for and promoting on October 28.

Volvo could have a free float of 17-21 per cent after the offering nonetheless will proceed to be managed by Chinese language language carmaker Zhejiang Geely, which presently owns 98 per cent of the shares and is able to retain 97 per cent of the voting rights even after the offering.

Hakan Samuelsson, Volvo chief authorities, talked about the Gothenburg-based carmaker would use a whole lot of the IPO proceeds to fund its push to solely promote electrical vehicles by the highest of this decade, whereas a smaller half would improve its manufacturing functionality and ability to advertise vehicles on to shoppers.

“As a listed agency, our ambition ought to combine turning into our enterprise’s quickest transformer and creating price for our shareholders,” he added.

The turnround of Volvo, which was purchased by Ford Motor to Geely in 2010 for $1.8bn, is a gigantic success story for Chinese language language possession as a result of the deal was one in all many nation’s largest overseas acquisitions.

Nevertheless Volvo’s listing comes as tensions develop between China and the US and parts of Europe. A earlier itemizing in 2018 was shelved as a consequence of fears {{that a}} commerce battle between China and the US could hurt its capability to achieve the $30bn valuation Geely believed it merited.

Volvo’s IPO is able to be priced at SKr53-SKr68 per share, giving the carmaker a market capitalisation of SKr163bn-SKr200bn ($19bn-$23bn). Polestar, the lossmaking electrical car mannequin half-owned by Volvo that solely purchased 10,000 vehicles last 12 months, is able to guidelines in 2022 by the use of a specific aim acquisition agency at a valuation of $20bn.

People close to the carmaker instructed it was pricing its offering fastidiously to ensure upside for model spanking new consumers. Volvo talked about it had secured backing from plenty of Nordic pension funds and asset managers as cornerstone consumers for about SKr6.4bn of the offering. Current minority homeowners AMF and Folksam will convert their alternative shares into common shares, contributing SKr5.3bn to the IPO.

Volvo has prolonged lagged behind larger premium carmakers akin to Audi, BMW and Mercedes in relation to product sales and income margins. The Swedish group purchased about 740,000 vehicles inside the 12 months to the highest of September, decrease than half the extent of its German rivals. Nonetheless it targets to advertise 1.2m by the middle of this decade.

Important to its success shall be its transformation to electrical vehicles, one in all many quickest of all typical producers. Volvo announced in June it’d assemble a battery gigafactory with Swedish start-up Northvolt to produce enough electrical packs to vitality 500,000 vehicles a 12 months from 2026.