Geely considers restarting Volvo IPO valued at $20 billion

According to foreign media reports, Zhejiang Geely Holdings Group is considering reviving its initial public offering ((IPO)) of Volvo Motor, which could be valued at around $20 billion, according to foreign media reports.

Geely Holdings, which is minority-owned, has been in talks with potential advisers about plans to sell Volvo shares as early as this year, according to people familiar with the matter. It is reported that the company is considering listing in places such as Stockholm and Amsterdam. These people spoke on condition of anonymity because of the confidentiality of the information.

Carmakers have been looking for ways to finance the huge investment needed for a huge shift to electric vehicles. In February, Geely Holdings abandoned plans to merge Volvo with its listed Geely holding (Geely Automobile Holdings), instead deciding to merge the powertrain businesses of the two companies into a new company and cooperate on technology development.

The negotiations are still at an early stage and details such as potential valuations are likely to change, according to people familiar with the matter. A representative of Geely Holdings declined to comment. A spokesman for Volvo said the February agreement enabled the two companies to explore their capital market options to achieve shareholder value.

Volvo will consider a variety of capital market options, including possible IPO and stock market listings, the spokesman said. So far, the company has not made a decision. If necessary, appropriate regulatory disclosures will be made at the appropriate time.

Geely Holdings sought to IPO Volvo cars in 2018. The company shelved the plan because investors were unhappy with its valuation of up to $30 billion, people familiar with the matter said at the time.

Global companies have raised $220 billion through IPO this year, according to data compiled by Bloomberg. This figure has increased nearly sixfold compared with the first quarter of 2020.

In 2010, Geely Holdings bought Volvo from Ford for $1.8 billion. The Swedish brand has thrived under the management of its new owner and has maintained a large degree of independence in its global operations. Volvo sold more than 660000 cars worldwide in 2020, with China being its largest market, followed by the United States, Sweden and Germany.

Volvo's initial public offering will increase the connections and partnerships of Li Shufu, founder and chairman of Geely Holdings, in global auto manufacturing. Li Shufu is the largest shareholder in Daimler Group and the second largest shareholder in Swedish truck maker Volvo Group, and controls sports car maker Lotus Motor and London's iconic black taxi.

This year alone, Li Shufu has established links with search engine giant Baidu, contract manufacturing giant Foxconn Technology Group and Tencent Holdings to keep up with the accelerated shift to electrification and more software.

Volvo this month set an ambitious goal of selling only electric cars from 2030, a commitment that goes further than the plans announced by Volkswagen or BMW.

Geely has also been pouring resources into electric vehicles, and the Chinese-made 01 SUV, a joint venture between Geely and Volvo, will start shipping to Europe in April. Geely also controls electric carmaker Polestar, which is exploring options for listing in the US or Hong Kong as early as this year.