Advertisement
IPO
BusinessCompanies

Volvo cuts the size of its initial public offering by a fifth to US$2.3 billion amid soaring oil cost, supply chain disruptions

  • The carmaker, owned by China’s Zhejiang Geely Holding Group, is now selling shares to raise about 20 billion kronor (US$2.3 billion), Volvo said
  • The carmaker also set a price of 53 kronor a share, at the low end of its initial range

Reading Time:2 minutes
Why you can trust SCMP
An employee working on a Volvo S60 on the assembly line at the company's manufacturing plant in Ridgeville, South Carolina. Photo: Handout
Bloomberg
Volvo Car slashed its initial public offering (IPO) by a fifth, making it the latest in a string of European companies to pull back from equity markets roiled by soaring energy costs and persistent supply chain delays.
Advertisement
The carmaker, owned by China’s Zhejiang Geely Holding Group, is now selling shares to raise about 20 billion kronor (US$2.3 billion), Volvo said Monday. It also set a price of 53 kronor a share, at the low end of its initial range.

A glut of similar IPOs and the hard-to-value stake Volvo Cars owns in electric sports car-maker Polestar has curbed investor appetite under the originally planned terms, according to people familiar with proceedings said. The Swedish manufacturer initially projected a valuation of between US$19 billion and US$23 billion.

Volvo Cars seeks to sell only fully electric vehicles by the end of this decade and to build a battery plant in Europe. The company will use the IPO funds to add carmaking capacity to almost double annual sales to 1.2 million vehicles by 2025.

“The proceeds raised from the IPO together with our strong balance sheet will secure the funding of our fastest transformer strategy and the delivery of our mid-decade ambitions,” Chief Executive Officer Hakan Samuelsson said in the statement.

Advertisement
European companies including Dutch consumer-electronics retailer Coolblue and health care property company Icade Sante put IPO plans on ice in recent weeks as investors became picky about where they put their money amid a flurry of deals. Equity markets worldwide have also turned volatile amid soaring energy prices, faster inflation and a debt crisis at China Evergrande Group.
Advertisement