STOCKHOLM, Oct 28 (Reuters) – Volvo Cars is hoping buyers will purchase into its long-term electric car technique and see previous provide chain worries and questions on its shift to battery energy because it gears up to make its market debut in Europe’s greatest IPO thus far this 12 months.
Shares within the Swedish carmaker, owned by China’s Zhejiang Geely Holding (GEELY.UL), are attributable to begin buying and selling on Friday, a day later than initially deliberate after it minimize the scale of its itemizing and priced it on the backside of a previously-announced vary, valuing the agency at simply over $18 billion. learn extra
The itemizing comes at a time when investor urge for food for the electric car (EV) sector is strong, with Elon Musk’s Tesla (TSLA.O) seeing its market worth cross $1 trillion for the primary time this week. learn extra
But issues over how a lot management Geely would retain over the listed enterprise, issues within the international provide chain and worries Volvo could possibly be caught in commerce wars involving China have curbed investor enthusiasm.
Geely agreed final week to provide up enhanced voting rights that will have given it 98% of any shareholder vote after itemizing, regardless of its stake dropping to round 84%
Volvo Cars, whose fashions embody the high-end XC-90 SUV, is within the midst of remodeling to grow to be a totally electric carmaker by 2030. Its Recharge electric fashions comprised 24.9% of its international gross sales within the first 9 months of 2021, and it has a 49% stake in EV maker Polestar.
Faith in that transition could possibly be key to the IPO’s success.
“It’s easier for a new company like Tesla or Polestar to start manufacturing electric vehicles, but for someone like Volvo transforming the old infrastructure and firing people and so on, it’s a challenge,” stated NordLB automotive analyst Frank Schwope.
“But even if it’s not priced as expected it’s encouraging for other companies as well. The COVID-19 pandemic was an inflection point for electric mobility,” he added.
So far, buyers have solely given partial approval. Volvo had sought a valuation of $18-$23 billion, earlier than pricing the shares at 53 Swedish crowns apiece, on the backside of that vary.
“The owner needed the deal to work this time round, so there was a real willingness to engage with investors,” stated a supply conversant in the transaction.
“It has been a really tricky IPO market over the last few months, so it made sense to downsize the deal and price it sensibly. That’s how the price discovery process works – this is good,” he added.
Expectations that rising inflation will result in larger rates of interest world wide have damage inventory market confidence and prompted a raft of IPO cancellations in Europe and the United States in latest weeks.
Many offers that did undergo over the previous 12 months at the moment are within the crimson, with the FTSE Renaissance IPO Index (.FTIPOSE) of recently-listed corporations down 10.6% this 12 months.
A flotation try by Volvo Cars in 2018 was postponed attributable to commerce tensions and a downturn in automotive shares.
($1 = 8.5883 Swedish crowns)
Editing by Mark Potter