Volvo Cars plans $20 billion stock IPO this month, sources say

Updated: September 15th, 2021 10:40 PM IST

Volvo Cars plans $20 billion stock IPO this month, sources say:

Volvo Cars plans $20 billion stock IPO this month, sources say

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STOCKHOLM — Chinas Geely Holding is in advanced discussions with banks to list its Volvo Cars unit in the coming weeks, three sources told Reuters, in what is expected to be one of Europes biggest initial public offerings (IPOs) this year.

Volvo Cars is aiming for a valuation of about $20 billion in the planned Stockholm listing, the sources said, with one saying the launch was penciled in for the end of September.

Goldman Sachs and SEB are leading the transaction, while other banks including BNP Paribas, Carnegie and HSBC are also involved in the deal, the sources added.

Volvo Cars declined to comment. Geely did not immediately respond to an emailed request for comment outside normal business hours in China. SEB and Goldman Sachs declined to comment. The other banks were not immediately available.

Geely, which bought Volvo from Ford more than a decade ago in the biggest acquisition by a Chinese firm of a foreign car maker, sought to float shares in the Swedish firm in 2018 but then pulled the deal citing trade tensions and a downturn in automotive stocks.

Traditional carmakers have fallen out of favor in recent years, as Tesla has risen to be one of the worlds most valuable companies, putting the focus on electric vehicles.

Many European firms have pivoted toward the electric sector, including Volvo, which aims to only make fully electric cars by 2030 and owns a 49.5% stake in electric car maker Polestar.

Gothenburg-based Volvo Cars aims to secure a valuation of roughly $20 billion, one of the sources said, while another mentioned a possible range of $20 billion to $30 billion.

A $20 billion valuation for Volvo would be equivalent to six to seven times its earnings, a level some analysts say is high although it would put it in line with rivals Daimler and BMW. Teslas valuation is more than 70 times that.

"The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue," Schwope said.

For Geelys founder Li Shufu, who bought Volvo for $1.8 billion, the listing is a milestone on the road to transport of the future, where cars are part of an electrified network of mobility services generating data and business opportunities.

A slew of startups have tapped into the investor frenzy for electric vehicles this year. Rivian, which rolled its first electric pickup truck for a customer off the production line this week, will seek a valuation of about $70 billion to $80 billion when it goes public at the end of this year, sources have told Reuters.

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