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Picture: REUTERS/BOB STRONG
Picture: REUTERS/BOB STRONG

Volvo Cars is looking to raise 25-billion kronor ($2.9bn) in a Stockholm initial public offering in a test for automakers amid the sector’s transition to electric vehicles.

The Swedish carmaker, owned by China’s Zhejiang Geely Holding Group, is selling shares in a price range of 53 kronor to 68 kronor, according to a statement on Monday. The deal values Volvo Cars at as much as 200-billion kronor.

The IPO is set to be Europe’s largest since Polish parcel-locker provider InPost's €2.8bn offering in January, according to data compiled by Bloomberg.

Proceeds from the share sale will help Volvo shift to a direct-to-consumer sales and subscription model, while the company this year also set an ambitious goal to go fully electric by 2030. Raising additional funds will smooth the shift away from legacy combustion engines, and put the company on course to chase the lofty valuations of other EV specialists such as Nio and Tesla.

The IPO also comes less than a month after electric-vehicle maker Polestar, controlled by Volvo and Geely, said it will go public in New York via a blank-cheque merger. The deal implies an enterprise value of $20bn for the start-up, with Volvo expecting to hold a 50% stake in Polestar after it lists.

Cornerstone investors including AMF Pensionsforsakring, Swedbank Robur, If P&C Insurance, Nordea Funds, Skandia Fonder and Skandia Mutual Life Insurance Company, and Danica Pension, Livsforsikringsaktieselskab have committed to buying 6.4-billion kronor worth of shares in the IPO.

The offering comprises 367.6-million to 471.7-million new shares and the stock is set to start trading in Stockholm on October 28.

Goldman Sachs and SEB are global coordinators on the IPOs, alongside bookrunners Morgan Stanley, BNP Paribas , HSBC Holdings , JPMorgan and Nordea Bank . Carnegie Investment Bank and Swedbank are co-lead managers.

Bloomberg. More stories like this are available on bloomberg.com

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