Volvo on Road to Possible $20B IPO

Volvo Cars’ parent company is preparing to list the car company in a $20 billion initial public offering that could be one of the largest European IPOs of the year.

According to Reuters, sources say China’s Geely Holding — which purchased Volvo in 2010 — is in advanced discussions with banks for the IPO, which could happen at the end of the month.

The sources say the transaction is being led by Goldman Sachs and SEB, with assistance from BNP, Paribas, Carnegie and HSBC. One source said Volvo is seeking a valuation of about $20 billion, while others have put the amount at as much as $30 billion or as low as $16 billion.

NordLB automotive analyst Frank Schwope told Reuters he estimated a valuation range of $10 billion to $15 billion.

"The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue," Schwope said.

The Reuters report says Geely sought to float Volvo shares in 2018 but backed away from the deal due to trade issues and a downturn in auto stock.

The story notes that several startups have taken advantage of heavy investor interest in electric vehicles this year, pointing to Rivian, which unveiled its first electric pickup truck this week and will seek a $70 billion to $80 bill valuation when it goes public later this year.

Read more: Ideanomics Buys VIA Motors to Bolster Electric Vehicle Growth

There’s also the FinTech Ideanomics, which announced last month its plans to purchase the electric commercial vehicle firm VIA Motors in a $630 million all-stock deal. EVs have become more in vogue as automakers strive to make more of them due to stricter carbon emission mandates in China and Europe.