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Geely’s Volvo IPO should go better this time

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

LONDON (Reuters Breakingviews) - Zhejiang Geely founder Li Shufu has picked a good time to exploit the mania for battery rides. On Monday Sweden’s Volvo Cars, owned by Zhejiang Geely, announced https://www.media.volvocars.com/global/en-gb/media/pressreleases/287174/volvo-cars-announces-its-intention-to-launch-an-initial-public-offering-and-list-on-nasdaq-stockholm that it wants to raise 25 billion Swedish crowns ($2.9 billion) by listing in Stockholm. It comes after an aborted initial public offering in 2018, when investors balked at a mooted $30 billion valuation.

There are sound reasons why Li might get there this time. Firstly, his plans to axe gas guzzlers by 2030 are the most ambitious of traditional automakers. Second, Volvo’s all-electric brand Polestar announced that it would reverse into a blank-cheque vehicle listed in New York at a $20 billion valuation. Take Volvo’s one-half Polestar stake and value the rest at 16 times pre-pandemic earnings – the average of German rivals BMW and Daimler – and Volvo might be worth $27 billion. However, if it can convince investors that plans to separate the combustion engine business merit a more Tesla-like valuation, then that could inflate dramatically. Geely’s electric acceleration may be just beginning. (By Christopher Thompson)

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(Editing by Peter Thal Larsen and Oliver Taslic)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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