Eyeing IPO, Volvo Cars to just take total manage of its Chinese business

  • Volvo Cars to acquire out parent Geely from Chinese JVs
  • Two action deal seen formally completed in 2023
  • Geely thinking about selections for Volvo Cars and trucks, which include IPO

STOCKHOLM/BEIJING, July 21 (Reuters) – Volvo Autos has struck a deal to buy out guardian firm Zhejiang Geely Keeping (GEELY.UL) from their joint ventures in China, in a transfer that could make a prospective initial community offering (IPO) for the Swedish automaker far more interesting to buyers.

Hangzhou-based mostly Geely, which also owns a 9.7% stake in Daimler (DAIGn.DE), claimed before this 12 months it was considering choices for Volvo, such as an IPO and inventory marketplace listing. In February, Geely’s Hong Kong-detailed device Geely Car (0175.HK) and Volvo Cars scrapped ideas to merge. study much more

Handelsbanken Funds Markets analyst Hampus Engellau explained using total handle of the Chinese joint ventures could enable sleek the way for a Volvo Cars IPO.

“The clearer the ownership structure is, and the clearer the stakeholders in the corporation seem, the a lot easier it will get for investors to look at what it is they are investing in,” he mentioned.

Analysts count on other foreign automakers to strike related discounts in China, the world’s largest auto sector, when the country’s requirement for auto production to be carried out with a neighborhood joint venture partner is lifted upcoming year.

This kind of policies for electric powered carmakers have presently been lifted, making it possible for Tesla Inc (TSLA.O) to make and sell cars by using fully-owned operations in China. Volkswagen has acquired regulate of an electric powered vehicle unit in the eastern metropolis of Hefei.

Volvo Cars’ offer, economical terms for which ended up not disclosed, will give it full possession of its production crops in Chengdu and Daqing, its Chinese gross sales corporation and its investigation and development facility in Shanghai.

Volvo Automobiles marketed around 166,000 autos in China final year, and its sellers are presenting significant discount rates to contend with other premium models like BMW (BMWG.DE) and Audi (VOWG_p.DE).

The Gothenburg-centered organization was acquired by Geely from Ford (F.N) in the aftermath of the world wide money crisis far more than a 10 years back, and has considering that shared ownership of its Chinese vegetation with its mother or father.

Volvo Cars stated the transactions, which are subject to regulatory acceptance, would be carried out in two actions, starting in 2022 and seen formally finished in 2023.

“These two transactions will develop a clearer ownership construction inside of equally Volvo Automobiles and Geely Holding,” Geely’s CEO Daniel Li stated in a assertion, which did not refer to the feasible IPO.

Volvo Autos CEO Hakan Samuelsson explained in June the corporation was creating progress in the direction of a probable IPO later in 2021, and that when it would continue on to share platforms and elements with Geely, they would do so at “an arm’s length distance,” regular with the way impartial providers do small business.

Reporting by Niklas Pollard and Yilei Sun
Added reporting by Helena Soderpalm
Modifying by Anna Ringstrom and Mark Potter

Our Standards: The Thomson Reuters Belief Principles.

Kitty Gochal

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