Volvo Eyes a $2.86 Billion IPO
Volvo Could be Valued at $25 Billion
The Swedish vehicle maker Volvo Cars is aiming to raise $2.86 billion in an initial public offering in Stockholm. The vehicle maker, which is owned by Geely (GELYF), could be valued at $25 billion in the transaction.
In addition to Volvo selling an unspecified amount of shares equal to $2.86 billion, Geely could also unload some of its stake. It is not clear what percentage of Volvo Cars Geely will own once the IPO is complete, but the Chinese company has said previously it wants to be a major shareholder in the public company. Volvo plans to use the money from the IPO to shift production to electric vehicles, boost its supply of batteries, and enhance its production of electric motors.
Volvo’s IPO Has Been in the Making for a Decade
It has been a long journey to Volvo’s impending IPO. Ford (F) sold Volvo to Geely in 2010 for $1.8 billion. Over the next decade Geely poured money into the business so it could revamp the brand’s lineup and grow business in China. All of those efforts have paid off: Volvo is now profitable and is ahead of many of its rivals in the EV race.
Volvo has also gained popularity in the US. Stateside, it competes with other premium brands such as BMW (BMWYY), Audi (AUDVF), and Mercedes-Benz (DMLRY). For the first nine months of 2021, Volvo sold 530,649 vehicles—an 18% year-over-year increase. The carmaker is aiming to sell more than one million cars per year in the coming years.
The EV Race Heats Up
If Volvo is able to garner a $25 billion valuation, it would surpass Europe’s largest vehicle maker, Renault (RNLSY), which has a market capitalization of over $10 billion.
At $25 billion, Volvo will still be tiny compared to the largest vehicle makers including GM and Ford, as well as the leading EV maker Tesla (TSLA). Still, Volvo does provide a way for investors to bet on the EV market outside of the biggest players.
The EV market is heating up and vehicle makers are pouring billions of dollars into their EV efforts. Volvo may be relatively small, but with a potential warchest of $2.86 billion, it will be interesting to see what the vehicle maker does once it goes public.
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