Volvo Cars to announce IPO in listing that could value group at $25bn

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Chinese-owned Volvo Cars will announce its long-awaited plans for an initial public offering in a matter of days, people familiar with the matter said, as the Swedish carmaker seeks to capitalise on a rise in premium sales and the growth of its all-electric Polestar brand.

The listing could value Volvo Cars at roughly $25bn, they added, with about $10bn of that figure attributed to Volvo’s 50 per cent stake in Polestar, which is set to go public itself through a special purpose acquisition company at a valuation of $20bn.

That would leave the remaining Volvo business, which sold more than 700,000 vehicles in 2019, valued at only $15bn, a fraction of the value of premium competitors BMW and Daimler.

However, a float would still provide a large return to Volvo Cars’ owners Geely, which bought the ailing company for $1.8bn from Ford in 2010.

The timing of the expected Volvo Cars IPO announcement was first reported by the Wall Street Journal.

An attempt to float Volvo Cars in 2018 was abandoned by Geely because of fears that a trade war between the US, Europe and China would hurt the company’s valuation. At the time, Geely originally believed it could fetch a $30bn valuation for the brand.

Volvo Cars’ chief executive Hakan Samuelsson said then that the “conditions right now are not optimal to give certain upside for the investors”.

A less erratic US administration may have given Volvo Cars a stable window to hold an IPO, people familiar with the matter speculated.

The company has also been faring well in recent months. It posted its best-ever first-half results in July despite the global shortage in semiconductors that has roiled the auto industry.

Last week, Polestar, which was spun off from Volvo Cars four years ago and is backed by actor Leonardo DiCaprio, said it would combine with Gores Guggenheim, a Spac backed by billionaire private equity investor Alec Gores and Guggenheim Capital.

The company, which competes with Tesla, said it would expand from the 14 markets it is in at present to 30, and focus especially on the Asia-Pacific region.

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