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Volvo IPO prices are lower than expected despite ambitious EV plans

Volvo Cars, a Swedish automaker owned by China’s Geely Holding Group, set the price of a new equity listing at the lower end of its target range on Monday, allowing investors to enjoy young electric cars as a traditional automaker. He emphasized that he did not want to lend his evaluation. Car company.

Volvo said it has set the price of its shares at SEK 53 each. This corresponds to the lower limit of the target range of up to SEK 68, $ 6.18. The offering estimates Volvo’s value at just over $ 18 billion, and is ashamed of the $ 23 billion that the company wanted to achieve and the $ 25 billion that analysts had. Float as much as possible..

According to the company, the shares will open on the Nasdaq Stockholm Exchange on Friday, October 29th.

As prices go down, the expected revenue from the IPO goes down.This is even a traditional car company Ambitious electrification plan Continue to struggle to achieve Star rating Handed over immediately

Tesla Ltd,

TSLA 4.77%

Boasting a market value of $ 900 billion,

Reauto Ltd,

NIO Ltd

When

Xpeng Ltd

Li Auto’s American Depositary Receipts are a fraction of Volvo’s, but the value of Chinese automakers is about $ 33 billion. NIO’s ADR brings the company a market value of about $ 64 billion, and Xpeng touts a market value of about $ 37 billion.

According to those familiar with these conversations, Volvo has encountered opposition from investors who opposed such an assessment of traditional automakers.Potential new investors start Volvo’s business New EV makerHe said Volvo’s transformation strategy was bold, but not yet proven.

Instead, they have shown Volvo that they are ready to rate the company on a lower multiple than traditional carmakers attract, one arguing-savvy said.

Investors also have a valuation discount of nearly $ 10 billion on Volvo’s nearly 50% stake in electric car maker Polestar, as Volvo has no plans to realize its value in the short term by selling its stake. He said he evaluated it in.

Volvo CEO Hakan Samuelsson said in an interview with The Wall Street Journal on Monday that the fall in prices made it difficult to sell to investors, as he considered various factors before reducing the IPO. Denied that it suggested.

“Of course, we are listening to the market,” he said. “We really need to ensure our transformation. We need to ensure free float liquidity in our stocks, but it’s also important to leave the potential for new shareholders to develop good value.”

Biden’s bipartisan infrastructure bill contains specific references to strengthening the US EV charging network. That has led a group of automakers to dramatically boost EV sales forecasts for 2030, even though the bill has not yet been signed. The WSJ’s George Downs is investigating what that means for your drive.Illustration: George Downs

The company raises less than expected, but Samuelson said the revenue is still sufficient to secure funds for Volvo’s transition to a full-fledged electric vehicle maker in the coming years.

Volvo CFO Bjorn André told the journal that revenue from a fully subscribed IPO would be about 2.7 billion if the so-called green shoe, or secondary offer, was carried out as planned. Equivalent to dollars. Initially, Volvo wanted to raise 25 billion kronor, or about $ 2.9 billion, in the primary offer alone.

“We are very interested in Scandinavian retail investors and I think this price will rise in the coming weeks,” said Anwall.

Investors, especially those in the Nordic region, also favored one Class B voting stock, which gives Volvo two classes of shares and gives all investors equal rights. According to a person familiar with the debate, in the old plan, Geely Holding still held about 97% of the voting rights, but its share ownership has dropped to about 80%.

Earlier this month, Geely agreed to abandon non-voting Class A shares and convert all shares to Class B voting shares following the Volvo IPO.

Geely of China bought Volvo for $ 1.8 billion in 2010, when it was struggling under the ownership of Ford Motor Company. Volvo’s pricing estimates that 82% of Geely’s post-IPO stake is about $ 15 billion. One of the biggest turnaround stories in the automotive industry for Swedish car markers owned by Geely.

Additional core shareholders include Swedish institutional investors Forksum and AMF, with a total share of Volvo’s future anchor shareholders of 86.3%. The remaining 13.7% of Volvo’s Class B voting stock, the only common stock, is freely variable.

Volvo has extended the offering’s subscription phase by one day.

Write in William Boston william.boston@wsj.com And Ben Dammet ben.dummett@wsj.com

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Volvo IPO prices are lower than expected despite ambitious EV plans

Source link Volvo IPO prices are lower than expected despite ambitious EV plans

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