Volvo IPO Might Happen in 2021—Date and Price, Explained
Swedish automaker Volvo Cars, owned by Chinese Geely Holdings, is said to be considering an IPO in 2021 on the Stockholm Exchange.
Sept. 16 2021, Published 9:38 a.m. ET
According to several sources, Volvo Cars might be in the process of pursuing an IPO this year, according to Reuters. Volvo has been owned by Chinese Geely Holding for 11 years, with one previous attempt to take the company public during that time.
The valuation for a Volvo IPO is uncertain, but some sources have suggested $20 billion as a valuation for the Sweden-based carmaker. If the company does go public, it will list on the Stockholm Exchange and might be among the largest European IPOs for 2021.
Who owns Volvo Cars?
Chinese firm Geely Holding owns Volvo Cars. Geely founder Li Shufu purchased Volvo from Ford Motor Company. The 2010 sale of Volvo Cars was China’s largest foreign car company acquisition. Geely wanted Volvo to be competitive with high-priced sedans under BMW and Mercedes.
In 2018, Geely Holding considered an IPO for Volvo. However, that public listing was dropped. Geely cited “trade tensions and a downturn in automotive stocks” as the cause.
When will Volvo go public with an IPO?
One source familiar with the matter said that the IPO could happen as soon as the end of September, according to Reuters. The Gothenburg-based car firm would go public on the Stockholm Exchange.
The banks included in leading the transaction are Goldman Sachs and SEB, according to sources. BNP Paribas, Carnegie, and HSBC are also part of the IPO deal.
Volvo's IPO price and valuation
Sources who spoke about the potential Volvo IPO didn’t specify how many shares the company would offer. They also didn't provide a target per-share price. However, valuation figures were mentioned, with one source saying that $20 billion was the goal valuation. Another source said that the valuation range is $20 billion–$30 billion.
Due to Volvo's projections, another source said that $16 billion could also be a more “realistic” valuation. Currently, Volvo makes traditional gasoline-powered cars as well as hybrids and electric cars.
Reuters noted that if the company came in at a $20 billion IPO valuation, that would equal about six to seven times its earnings, which could potentially put it in line with Daimler and BMW.
Frank Schwope, an automotive analyst for NordLB, was less optimistic than other sources on the Volvo valuation. He put the company’s value at between $10 billion and $15 billion.
Earlier this month, Volvo cautioned that its sales for the second half of 2021 could decrease YoY compared to 2020, mainly due to supply shortages that slowed or halted production.
Volvo electric vehicles
Like many competing traditional automakers, Volvo is looking to expand its electric car offerings. The company aims to keep up with Tesla and other EV companies. Volvo’s stated goal is to pivot to producing only electric cars by 2030.
By 2025, Volvo plans for 50 percent of its sales to be electric vehicles and 50 percent hybrids. Also, it aims to be fully climate neutral by 2040.
Volvo owns a 49.5 percent stake in electric car brand Polestar, which said, “We share technology and engineering expertise with the Volvo Group, yet we go our own way.”