Cooled by the markets, Volvo lowers its claims before its IPO

Posted on Oct 25, 2021, 11:44 AM

The path to the Stock Exchange is definitely never without problems for Volvo Cars. Three years after having to give up its listing due to Sino-American trade tensions and the slowdown in the automobile market, the Swedish manufacturer must this time revise its ambitions downwards. He no longer expects to raise more than 2 billion euros (20 billion Swedish crowns) at the end of the operation, against 2.5 billion initially hoped for.

The Stockholm Nasdaq listing is also postponed by one day and will be held this Friday, October 29. Volvo’s automotive branch will be introduced at a price of 53 crowns per share (5.30 euros), the lower end of the indicative price range previously set (between 53 and 68 crowns). Its Chinese owner, Geely, will not exercise the option that would have allowed it to extend the size of the operation either – the free float is expected to be between 16 and 17.9% of the capital, whereas it was previously mentioned. ‘here a share between 19.5 and 24%.

The most modest scenario

It is therefore by the most modest of scenarios that Volvo Cars will make its big comeback on the stock market, a little less than fifteen years after its delisting. While it can count on the support of several Swedish institutional investors, the listing of the Gothenburg group does not raise crowds either in markets with uncertain conditions, between soaring energy prices,return of inflation and the Chinese real estate market weighed down by the fall of Evergrande.

Several groups, including the French Icade Santé and the Swiss Chronext, have also postponed their listing projects in the face of the instability of the window. Not enough to cool Volvo Cars, which however has no certainty of reaching the 16 to 19 billion euros of market capitalization targeted (twice that of Renault but much less than the 25 billion expected in 2018).

“The income from the IPO, together with our strong balance sheet, will ensure the funding of our fastest transformation strategy and the achievement of our mid-decade ambitions,” said Volvo Cars CEO Håkan Samuelsson in a statement.

A success, even under these conditions

Even under these conditions, the IPO would be an indisputable success for the manufacturer as for Geely, who bought it in 2010 from Ford for… 1.26 billion euros. Contrary to the skepticism of many observers, the brand has operated a spectacular recovery over the past decade, posting an operating profit of 1.3 billion euros last year for 660,000 cars sold (including 166,000 in China).

Pioneer of all-electric in the “premium” – its catalog should only offer battery vehicles by 2030 – Volvo Cars is also moving towards sales exclusively online, in the wake of Tesla. The formula is the same for its subsidiary Polestar, which, despite its 10,000 registrations last year, also goes to the Stock Exchange and targets $ 20 billion in capitalization … According to Bloomberg, the difficulties in valuing Polestar, owned 49.5% by Volvo Cars, also moderate investor appetite for the Swedish manufacturer.

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