Volvo Cars seeks to raise $2.9 billion in IPO

• Stockholm listing would represent one of the car industry’s most striking turnarounds
• It could value the company at upward of $25 billion.

Volvo Car Group AB will look to raise at least 25 billion kronor ($2.9 billion) in an initial public offering the company is forging ahead with despite the global chip shortage.

Proceeds will help the Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co. fund its shifts to fully electric cars and a direct-to-consumer sales and subscription model, the company said in a statement Monday. Geely intends to remain its largest shareholder, with the first day of trading planned for this year.

Volvo’s plan to sell shares got a boost from Polestar, the electric car company backed by the Swedish automaker and Geely, which last month agreed to go public via a blank-check firm at a roughly $20 billion valuation. Once the deal is completed, Volvo expects to own close to 50% of the combined company. 

Volvo’s IPO could value the company at about $20 billion, and at between $25 billion and $30 billion including the Polestar stake, according to a person familiar with the matter.

Polestar’s listing will be a “very big help for investors to really see the full value of Volvo, including this relationship with Polestar,” Chief Executive Officer Hakan Samuelsson said in an interview. He declined to comment on valuation.

The decision to list puts Volvo, founded in 1927 in Gothenburg, neck-and-neck with the four-year-old EV maker that will use the incumbent manufacturer’s production network. Volvo last year sold some 660,000 cars, and Polestar aims to deliver 29,000 vehicles in 2021 before adding new models to significantly grow its footprint.