Volvo Cars is cutting the size of its stock market listing, pricing it at the bottom of its suggested range and delaying it by a day after the Chinese-controlled carmaker struggled to attract investor interest.
The Swedish group said on Monday that it would now list on Friday, a day later than scheduled, at a price of SKr53 a share, which would give it a market capitalisation of about $18bn with the offering now fully backed by investors.
The carmaker is looking to raise SKr20bn ($2.3bn) from the initial public offering in Stockholm, down from its initial expectations of SKr25bn, while its Chinese owner Geely will no longer exercise an option that could have added about a fifth to the share sale.
Volvo’s stuttering IPO, three years after it was forced by a US-Europe-China trade war to pull a previous listing, has underscored the reticent attitude of some investors towards Beijing and traditional carmakers.
Geely had already been forced on Friday to loosen its almost total grip on Volvo by converting its vote-heavy class of shares into normal stock to head off a backlash from Swedish institutional investors.
There had been widespread fears about the control the Chinese carmaker would have under its original plan to retain 98 per cent of the voting rights even after its capital stake was due to fall to 83 per cent.
Under its new plans published on Monday, Geely would retain a stake that – in both capital and voting rights – of 84 per cent.
Volvo will be worth less than Polestar, the electric car start-up spun out of the Swedish carmaker that is due to list for $20bn via a special purpose acquisition company next year. Polestar sold 10,000 vehicles last year compared with 662,000 for Volvo.
People close to Volvo had initially indicated that Geely was looking for a valuation of more than $30bn.
Hakan Samuelsson, Volvo’s chief executive who is to retire at the end of next year, said there had been “intense” talks with investors over the weekend, particularly over how to value the carmaker but also over “China, voting rights, trade war”. Volvo has one of the most advanced plans of traditional carmakers to become fully electric by 2030 but currently only sells 3 per cent of such vehicles.
“Polestar are a pure electric player. In a way, they are 10 years ahead of us,” Samuelsson told the Financial Times.
He added that Geely had been “rather generous” to set the price at the lower range, giving “headroom” for new investors. Shareholders should see Geely as “a private Chinese company” that had been supportive of Volvo.
Bjorn Annwall, chief financial officer, said investors had a “believe it when we see it” approach to valuing carmakers undergoing the transition to electric vehicles.
Volvo said on Monday it would have a free float of 16 to 17.9 per cent after the IPO, depending on whether an overallotment option was exercised. Several large Swedish pension funds have pledged support for the IPO, amounting to SKr14.1bn — about 70 per cent of the total offering, with strong demand from retail investors too. Samuelsson said Volvo would continue its “dialogue” with international investors.