Geely’s Volvo Cars jumps 13% after IPO values it at $18 billion By Reuters

By Helena Soderpalm and Abhinav Ramnarayan

STOCKHOLM (Reuters) -Automaker Volvo Cars’ shares rose 13% above their offer price in its trading debut in Stockholm on Friday, following the completion of Europe’s biggest initial public offering (IPO) so far this year.

The Gothenburg-based company cut the size of its listing and priced it at the bottom of a previously-announced range UPDATE 3-Volvo Cars gives itself $18 bln price tag as cuts IPO size – Reuters News on Monday, valuing it at just over $18 billion and making it Sweden’s second largest listing yet.

The successful deal and after-market performance is a boost to a European automotive industry that has embarked on a challenging transition towards electric vehicles.

It also shows that while the IPO euphoria of the first half of 2021 is over, the market is open for new listings of sizeable companies with a story to tell.

Volvo Cars Chief Executive Håkan Samuelsson said the listing symbolised a recognition of its transformation plans.

“It’s a very exciting journey, and now we have the money for it,” he told journalists and investors in a webcast opening ceremony on Friday.

Shares in the carmaker, which is majority owned by Geely Holding, were trading at 60 Swedish crowns ($7.03) at 0837 GMT, after being priced at 53 crowns in the initial public offering (IPO).

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Apart from Volvo’s commitment to becoming a purely electric carmaker by 2030, it also has a 49% stake in EV venture Polestar https://www.reuters.com/business/autos-transportation/ev-maker-polestar-go-public-20-billion-valuation-via-spac-sources-2021-09-26, which said in September it would go public through a $20 billion deal.

A source familiar with the transaction said the outcome of this week’s IPO was good, even though investors had pushed back and forced Volvo to price at the bottom of the announced range.

“The company had to compromise on size and the governance structure. They were hoping for a read across on Polestar, but they were clearly not getting that,” the source said, requesting anonymity because they were not authorised to speak to the press.

Concerns over how much control Geely will retain over Volvo, problems in the global supply chain and worries car makers could be caught in trade wars involving China also curbed investor enthusiasm.

Geely chairman Eric Li said that when Geely acquired Volvo, its goal had been to send “the tiger back to the mountains”.

“Now our goal is to give that tiger wings and let it soar,” he said in a pre-recorded video.

($1 = 8.5219 Swedish crowns)