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The projected valuation of Volvo Cars in the forthcoming IPO is billed to be obtained based on the broad interest from local investors.
Geely-owned Swedish automaker, Volvo Cars is set to raise as much as 25-billion kronor (approximately $2.9 billion) via a Stockholm Initial Public Offering (IPO) billed to push its valuation to $23 billion in a listing that will be one of the biggest in Europe this year.
Volvo Cars is set to issue a total of 367.6-million to 471.7-million new shares and will price the IPO at 53 to 68 kronor per share, with a corresponding listing on the Stockholm Stock Exchange afterward. Volvo Cars have grown remarkably since Geely purchased the firm from Ford Motors Company (NYSE: F) for $1.8 billion about 11 years ago. The Chinese parent outfit initially attempted to take Volvo Cars public back in 2018 but was unable to pull off the deal as investors could not come to terms with the firm’s expected projection of $30 billion amid the automotive industry’s downturn as of then.
The current public funding the firm will receive will be pumped into bolstering its capacity to produce more cars as it looks to double its annual sales to more than 1.2 million vehicles in the coming years. The new capital will also be utilized in fueling the company’s ambition to become an all-electric car manufacturer by 2030.
“We have a very clear strategy to be an electric company in 2030 and we’ve been on that journey for some years now,” Volvo Cars CEO Hakan Samuelsson said in an interview. “With this, of course, we can secure that transformation, because of course, it’s not free of charge.”
The major global coordinators for the IPO include Goldman Sachs Group Inc (NYSE: GS) and SEB AB, while Morgan Stanley (NYSE: MS), BNP Paribas SA (EPA: BNP), and JPMorgan Chase & Co (NYSE: JPM) amongst others were also appointed as bookrunners for the offering. The company’s shares are billed to start trading as early as October 28.
Volvo Cars IPO Outlook Is Fueled by Its Associated Auto Brand
The projected valuation of Volvo Cars in the forthcoming IPO per its public debut pursuit is billed to be obtained based on the broad interest from local investors.
“I think we have a very strong interest especially from the Nordic investors,” CEO Hakan Samuelsson said in a news conference, a move that suggests investors are becoming more bullish on homegrown automakers as the fight against climate change intensifies.
Other reasons have been attributed to the massive valuation the company is set to hit by the IPO. The outlook on sister firm Polestar which is co-owned by Volvo Cars and Geely has also been attributed to be a good factor for the impending lift.
“I think their ability to pull off this valuation depends on Polestar, not just their investment but also how they can work together. Polestar is a promising company but what you are paying for there is for the future,” said NordLB analyst Frank Schwope, adding that his valuation expectations are very conservative.