Volvo Cars Owner Zhejiang Geely Selects Major U.S. Advisors to Explore IPO

Volvo Cars Owner Zhejiang Geely Selects Major U.S. Advisors to Explore IPO

Author: Paul Young   

Zhejiang Geely Holding Group Co., owner of Sweden-based Volvo Cars AB, has selected major U.S. investment banks Citigroup Inc., Goldman Sachs Group and Morgan Stanley to advise on an initial public offering for the carmaker this year, according to people with knowledge of the matter, Bloomberg has reported. Zhejiang Geely, which is backed by Chinese billionaire Li Shufu, acquired Volvo in 2010.

China's Zhejiang Geely and Volvo have discussed valuing the Swedish automaker in a range of $16 billion to $30 billion in a stock sale, the people said, asking not to be named as the negotiations are confidential. The companies held meetings in Sweden and Hong Kong this month to discuss a dual listing in both venues, they said.

The shares could be sold as early as this fall, though no final decisions have been made, they said. An IPO is an option but the decision is up to the owner, a representative for Volvo Cars said, declining to comment further.

Volvo Cars may seek to benchmark itself against automakers including Hong Kong-listed Geely Automobiles Holdings Ltd. and Tesla Inc. in the potential IPO, the people said.

Volvo has a record year in sales in 2017, mainly from a strong demand for new models. China continued to be its biggest market for Volvo, followed by Sweden and the U.S. Volvo is also pushing to expand its electric vehicle offerings in China.

Volvo announced in July of last year that all its new cars launched from 2019 onwards would be entirely electric or hybrids, becoming the first major manufacturer to announce it would be dropping internal combustion engine only vehicles.

Geely's Swedish unit holds 99 percent of Volvo Car AB, while a group of Swedish institutional investors holds the remaining 1 percent through another class of shares, according to its website.

Paul Young
Paul Young
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