Volvo’s $2.9B IPO marks key test in EV shift

Volvo Cars is looking to raise 25 billion kronor ($2.9 billion) in a Stockholm initial public offering in a test for automakers amid the sector’s transition to electric vehicles.

The Swedish brand, owned by China’s Zhejiang Geely Holding Group, is selling shares in a price range of 53 kronor to 68 kronor, the company said on Monday. The deal values Volvo Cars at as much as 200 billion kronor.

The IPO is set to be Europe’s largest since Polish parcel-locker provider InPost’s 2.8 billion-euro offering in January, according to data compiled by Bloomberg.

Proceeds from the share sale will help Volvo shift to a direct-to-consumer sales and subscription model, while the company this year also set an ambitious goal to go all electric by 2030. Raising additional funds will smooth the shift away from legacy combustion engines and put the company on course to chase the high valuations of other EV specialists like Nio and Tesla.

The IPO also comes less than a month after electric-vehicle maker Polestar, controlled by Volvo and Geely, said it will go public in New York via a blank-check merger. The deal implies an enterprise value of $20 billion for the startup, with Volvo expecting to hold a 50 percent stake in Polestar after it lists.

The offering comprises 367.6 million to 471.7 million new shares and the stock is set to start trading in Stockholm on Oct. 28.

Goldman Sachs Group and SEB are global coordinators on the IPOs, alongside bookrunners Morgan Stanley, BNP Paribas, HSBC Holdings, JPMorgan Chase & Co. and Nordea Bank. Carnegie Investment Bank and Swedbank are co-lead managers.

Volvo has previously said that owner Geely Holding will remain its biggest shareholder after the listing.

In 2018, Volvo Cars and Geely, which also owns an 8.2 percent stake in Sweden’s Volvo Trucks, postponed plans to float shares in the Swedish brand, citing trade tensions and a downturn in automotive stocks.

Reuters contributed to this report

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