By
Temitope Olatunji
March 11th, 2024
The proposed IPO plan by Volvo is arguably one of its long list of strategic goals to power the capital injection that will fuel its switch to electric car production in the coming years.
Gothenburg-based car manufacturing firm Volvo Cars is on track to float its Initial Public Offering (IPO) in Stockholm after months of deliberations. According to the Wall Street Journal, the plans may be announced as early as Monday, and the IPO could give the company as much as a $25 billion valuation. This valuation range will make the Volvo public debut deal one of the biggest in Europe in 2021.
The global push for tech-based IPOs has largely slowed down in the second half of the year when compared with the first, as many production outfits adjust to the realities of materials shortage. The COVID-19 pandemic and the long protracted lockdown slowed down the production of chips which are essential components of vehicles. These challenges have continued to impact the production capabilities and the financial outlook of both private and publicly listed outfits globally.
Volvo Cars was acquired by Zhejiang Geely Holding Group Co. of China from Ford Motors Company (NYSE: F) for $1.8 billion back in 2010 following the company’s liquidity strain stirred by the global financial crises. Since taking over Volvo, Geely has set the automaker on a path of growth that has reflected an ambitious push to compete with the world’s biggest brands. On Friday, Volvo Car USA reported a September sales result of 9,350 cars, down nine percent versus 2020, a visible impact of the chip shortage. Year-to-date the brand is up 29.6 percent, an increase of 21,761 cars sold in the same period last year.
Per an earlier Coinspeaker report, Goldman Sachs Group Inc (NYSE: GS), and SEB will be leading the transactions, while BNP Paribas (EPA: BNP), Carnegie, and HSBC Holdings plc (NYSE: HSBC) are also part of the deal according to sources familiar with the Volvo IPO ambitions.
Volvo Cars IPO: Pathway to Complete Product Electrification
The proposed IPO plan by Volvo is arguably one of its long list of strategic goals to power the capital injection that will fuel its switch to electric car production in the coming years. With the increasing clamor for EVs as a veritable way to combat the impact of climate change, several carmakers are gradually making a shift towards electric-powered cars, as a move to take on resident giants in this field, American auto manufacturing giant, Tesla Inc (NASDAQ: TSLA).
Volvo Cars have an ultimate target to make its entire fleet all-electric powered by 2030. As a way to align fully with its EV goals, the company still holds its 49.5% stake in electric car maker Polestar. Volvo’s total car deliveries lag behind the other mainstream vehicle production brands, and while it is a notable player in Swedish markets, the proposed IPO may stir its launch to new regions through the potential influx of investors it is bound to welcome into its fold.