Volvo Cars' $25bn IPO to be announced this week, say reports

by

Swedish automaker Volvo Cars is finishing up plans for an initial public offering (IPO) in a deal that could be worth as much as $25 billion, according to a report in the Wall Street Journal.

The carmaker, which is owned by China's Geely, is looking to capitalise on a rise in premium car sales and the growth of its all-electric mark Polestar, which is itself set to go public, at a valuation of around $20 billion, through combining with special purpose acquisition company (SPAC) Gores Guggenheim. 

Read more: Volvo to buy Geely out from joint ventures, eyeing potential IPO

The $25 billion figure takes into account the 50% stake in Polestar, which, after the latter goes public, would leave the remainder of the Volvo business - which sold over 700,000 vehicles in 2019 - valued at around $15 billion, just a fraction of the value of some of its competitors such as Daimler and BMW.

Nonetheless, floating the mark would still offer a large return for Geely, which bought the floundering firm from Ford in 2010 for $1.8 billion.

A previous attempt to make the company public in 2018 was abandoned amid fears of an escalating trade war between China, the US and, to some extent, the EU, which would push down the company's valuation. At the time, Geely reportedly believed it could fetch $30 billion for the firm.

After the failed attempt, Volvo Cars' CEO Hakan Samuelsson said that the "conditions right now are not optimal to give certain upside for the investors".

A more predictable White House occupant appears to have provided the company with a window to hold the IPO, it has been speculated.

Read more: Polestar set to expand China showroom to compete with Tesla

Despite the pandemic and the ensuing global shortage of semiconductors, both of which left the automotive sector reeling, Volvo Cars has fared relatively well this year and, in July, the company posted its best-ever results.

Polestar, which was spun off from Volvo Cars in 2017 and has backing from Titanic actor Leonardo DiCaprio, said last week that it would merge with blank-cheque SPAC Gores Guggenheim.

The Tesla-rival is looking to expand its presence from the 14 markets it is in presently to 30, with a special focus on the Asia-Pacific region.  

Back to Homepage

Back to Transportation