Chinese Volvo car owners had to bow to pressure

Volvo Cars decided to set an issue price of 53 Swedish kronor when the company goes public in Stockholm on Friday, a day after what was previously announced.

This is at the bottom of what was expected. Prior to the listing, Volvo Cars was operating in a price range of 53 NOK to 68 per share. In a press release, Volvo Cars also states that the company is reducing the size of the issuance of new shares from 25 to about 20 billion NOK.

The issue price of NOK 53 means Volvo Cars will have a market capitalization of around SEK 155 billion when the company debuts on the stock exchange on Friday morning. The menu will come a little too late to bring with it the enthusiasm for the menus that marked the markets just a few months ago.

China’s owners resolved from the conditions

Geely Sweden Holdings, the Chinese owner of Volvo Cars, has seen itself forced to improve conditions to complete the capital increase, in a market that this fall has become much heavier for new public offerings, among other things, for fear of more Corona problems and expectations of higher interest rates.

Geely decided not to use her right to expand the problem by about a fifth. Moreover, just before the weekend, Geely saw itself forced to convert A-voting shares into ordinary B shares, following pressure from large institutional Swedish investors. In practical terms, this means Geely is loosening a bit of its iron grip on Volvo cars, and Geely’s share of the vote has shrunk from 97 percent to 78 percent after the listing.

Swedish retirement giant Alecta says directly to Dagens Industri They now share the problem because of improved conditions – i.e. lower price and less power for Geely. It has attracted some attention up front that Alecta, one of the largest owners of the Stockholm Stock Exchange, was not included as the primary investor in the issuance.

Long way to enter

Volvo Cars’ listing comes three years after it was first planned. An impending trade war between the United States, China and Europe has forced Chinese owners to pull out of a planned IPO in 2018.

Volvo Cars is now priced significantly lower than electric car maker Polestar, which Volvo Cars has described as an independent subsidiary of Volvo Cars, which is owned by Geely/Volvo Cars. According to the Financial Times A separate IPO for Polestar is scheduled for next year, with a value of just over SEK 170 billion.

Volvo Cars sold 662,000 cars last year, compared to 10,000 Polestars.

Both Volvo Cars and Polestar are headquartered in Gothenburg. Volvo Cars is the former passenger car division of AB Volvo, Volvo Cars, which was spun and sold in 1999 to American Ford Motor Company, and to Chinese holding company Geely in 2010.

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