Volvo Cars Seeks Around $1 Billion Share Sale
Swedish car company has approached a number of Chinese investors about the share purchase
Volvo, which China’s Zhejiang Geely Holdings Group bought for $1.8 billion in 2010, has approached a number of Chinese investors about the share purchase, including sovereign-wealth funds and private-equity firms, the people said.
Volvo told the potential investors it could be seeking an initial public offering, the people said. The listing venue could be either Europe or Hong Kong, but the company hasn’t yet decided on a location or timetable, according to one of the people.
Geely is always talking with investors, said communications manager Ashley Sutcliffe. He added Geely has no plan for a Volvo IPO in the short term.
A spokesman for Volvo said an IPO is an option for the firm but said there are no current plans. He declined to comment on a share sale, saying it was “market speculation.”
Volvo said in late December that it had raised 5 billion kronor ($564 million) in a similar preferred-share sale to a group of Swedish institutional investors, including two pension funds and a local insurer. The sale was “another step towards Volvo Cars’ long-expressed ambition to act as a listed company,” Volvo said at the time.
Geely has plowed $11 billion into Volvo since the purchase, sprucing up Volvo’s model lineup, and boosting sales sharply in the U.S. and China. Volvo has slashed costs, in part by manufacturing some models in China for global export, and has embarked on a massive investment program to help it compete better with BMW AG, Daimler AG’s Mercedes-Benz, and Volkswagen AG’s Audi.
Volvo reported a 67% increase in net profit to 7.5 billion kronor in 2016 on revenue of 180.7 billion kronor, up 10% from the previous year. The Swedish company’s global sales grew 6% to 534,332 vehicles last year, on track for its sales target of 800,000 vehicles by 2020.