Zhejiang Geely Holding Group (Geely Holding), China’s largest private-owned automotive group, has decided to release more shareholdings in Volvo Car Group.
Geely offered some 100 million shares of Volvo Car Group at a list price of 37 Swedish crowns, resulting in a sales transaction of some €322 million. Thirty-seven crowns are 9% under the closing rate on Thursday and approximately one-third less than the starting price for a share when Volvo Car Group went IPO some two years ago on the Stockholm stock exchange.
The sell-off is a result of the lack of tradable Volvo shares. As there are so few, the value of the shares can oscillate quite heavily, negatively influencing its value altogether.
Increase the value
The move is “in accordance with Geely Holding’s long-term strategy to enhance the value of the Nasdaq Stockholm listed Swedish carmaker through an increase of liquidity and offer more opportunities to generate sustainable long-term value for institutional and retail investors,” says the official press release.
“After completing the share sale program, Geely Holdings’ shareholding in Volvo Cars will be 78,7%. Proceeds will be used to support global business development within the group,” the press release continues, and it is emphasized that the mother holding will continue to support the Swedish car manufacturing daughter intensively.
“Volvo Cars is today one of the world’s fastest-growing carmakers and iconic car brands. As the majority shareholder, we remain steadfast in our commitment to continue our support of Volvo Cars on its transformation toward becoming a fully electric carmaker, and we look forward to continuing this ongoing global success story,” said Daniel Donghui Li, Geely Holding Group CEO.
Volvo Cars CEO Jim Rowan added: “This increase in public float and trading liquidity improvement benefits both new and existing investors. It allows a wider base of shareholders to invest in Volvo Cars. We thank Geely Holding Group and all our shareholders for their continued support.”
One of the more prominent players
Geely Holding Group is primarily owned by the Chinese billionaire Li Shufu, who bought Volvo Cars from Ford in 2010. Apart from creating other brands inside the group, like Polestar, Zeekr, Lynk & Co, and others, Geely also detains smaller or larger participation in other notorious brands like Mercedes-Benz, Aston Martin, and Lotus, to name but a few.
Recently, Geely also became a 40% shareholder of Renault’s Horse division. This department will continue developing and selling ICE engines worldwide, especially in places where EV driving isn’t so evident yet.