18 Nov 23
News

Volvo shares plunged as Geely sells 3.4% of its shares

Volvo shares plunged as Geely sells 3.4% of its shares

Zhejiang Geely Holding Group, which acquired Volvo from Ford in 2010, has sold around 100 million shares of the Swedish car maker, causing a drop in shares up to 14% on Friday. Geely said that the move supports Volvo's long-term growth. 

The Geely Group has sold 3.4% of its shares in Volvo, decreasing from 82% to 78.7%, in a move that Geely describes as "creating more opportunities to generate sustainable long-term value for institutional and retail investors." Proceeds of the latest sale of shares will fund global business development, Geely said. 

According to Reuters, the shares were sold with a discount and generated around $350 million. Geely said it remains 'steadfast' to its commitment to supporting Volvo Cars in its transformation into an all-electric car manufacturer and looks forward to continuing the ongoing global success story. 

Geely holds an important role in supporting Volvo's global electrification plans, which aim to become zero-emission by 2030. Volvo also sold a 33% stake in its powertrain developer and producer, Aurobay, to Geely in November 2022. 

According to the Financial Times, Geely abandoned the initial plan to list Volvo's shares in 2018 due to the eruption of the US-China trade war. 

Narrowing investor concerns

Following a series of IPOs (initial public offerings) of the car brands it owns, the move by Geely appears to be reducing the number of shares it owns to lower investors' concerns about the company having too much control. 

Volvo had one of the biggest IPOs in Europe in 2021, with shares surging up to 22% in Nasdaq Stockholm. Another Geely-owned brand, Polestar, filed for IPO in 2021, with shares debuting on Nasdaq. Two other brands of Geely are to follow suit this year in the US, Lotus via a SPAC IPO (through a merger) and Zeekr. 

The main image is courtesy of Volvo Cars.

Authored by: Mufit Yilmaz Gokmen