Volvo Cars, the Swedish multinational automobile manufacturer, has reportedly trimmed its initial public offering by a fifth, becoming the latest European company to withdraw from equity markets stirred up by rising energy prices as well as ongoing supply chain inefficiencies.
The carmaker, which is owned by Zhejiang Geely Holding Group Co., or more commonly known as Geely, of China, is selling shares to generate approximately 20 billion kronor (US$2.3 billion). It also established a price of 53 kronor per share, which was towards the bottom of its initial range.
As per reports, investors’ interest has been stifled by a slew of comparable IPOs, as well as Volvo Cars' difficult-to-value ownership in Polestar, an electric sportscar manufacturer. The Swedish firm estimated a value of between US$19 billion and US$23 billion at the outset.
Hakan Samuelsson, CEO of Volvo Cars stated that the funds raised from the IPO, combined with Volvo’s solid balance sheet, will ensure that the company’s fastest transformer model is funded and that the its mid-decade goals are met.
By the end of this decade, Volvo Cars plan to offer only entirely electric vehicles and develop a battery plant in Europe. By 2025, the business plans to virtually increase annual sales to 1.2 million automobiles, thanks to the proceeds from the IPO.
In recent weeks, European companies such as Coolblue NV, a Dutch consumer electronics firm, as well as Icade Sante SAS, a healthcare property group, put their IPO plans on hold as investors become more selective about where they invest their money amidst a flurry of acquisitions.
According to Volvo, the modified listing plan will include a free float of up to 17.9%. The carmaker also pushed back the opening of trading in Stockholm by one day, to October 29. The revised listing is still a success for Geely Holding, which bought Volvo from Ford for US$1.8 billion 11 years ago.
Volvo seemingly thrived under the newfound ownership, with China being its major segment, followed by the United States, Sweden, and Germany.