October 6, 2021 8:00 AM



The Swedish automaker Volvo, with nearly a century of history, has announced its intention to go public. The company is well known all over the world for its safe vehicles, which are sold in 100 countries of the world through 2,300 dealerships. The company's largest markets are China, USA, Sweden, UK and Germany. In addition to personal passenger transport, Volvo manufactures trucks, buses, heavy construction equipment and marine drive systems, and operates a financial services business. The main shareholder of the company is Geely, a Chinese multinational automobile company headquartered in Hangzhou, Zhejiang province. Previously, Volvo belonged to the American Ford Motor, but due to the deterioration of the situation after the financial crisis, the Swedish company was sold to Geely in 2010 for $ 1.8 billion.

Volvo's global sales in 2020 totaled 661,713 thousand vehicles, down 6.2% from the Covid-19 pandemic. In 2019, the company recorded a record high for the sixth consecutive year. In the first half of 2021, Volvo sales increased by 41% compared to the same period last year - up to 380,757 thousand cars. Including in the USA they increased by 47% and amounted to 63.754 thousand cars. The company keeps up with the times, therefore, pays great attention to the development of the product line. Volvo plans to produce only electric vehicles by 2030. By this time, the company intends to gradually remove from the global model range all vehicles with an internal combustion engine, including hybrid models.

Volvo is actively involved in the ESG agenda. For example, in 1988, the company initiated the annual Volvo Environment Prize for people who make scientific discoveries in the field of the environment and sustainable development with a prize fund of $ 215,000. During the COVID-19 pandemic in 2020, Volvo allowed medical workers to use its fleet of corporate vehicles working in hot spots in the United States. The company has won numerous awards in 2021, such as the Top Safety Pick + for all 2021 Volvo models from the Insurance Institute for Highway Safety. Volvo's new XC40 Recharge electric car has received high marks from Good Housekeeping, Autotrader, Kelly Blue Book and Consumer Guides.

In its long history, Volvo has organized just one round of private equity investments, which raised SEK 6 billion in 2016. In 2018, the company invested part of the proceeds in the purchase of Freewire Technologies, a company that produces charging stations and solutions for electric vehicles. In 2019, Volvo became a co-investor in Forciot, an IOT sensor solutions company. In 2021, Volvo became an anchor investor in Polestar, which makes electric vehicles. The company is also developing a line of its own software. So, in 2017, the Luxe parking application and the Garantibil car purchase and sale platform were purchased.

Initially, Volvo's interest in an IPO became known in 2018, but the company decided to postpone the deal due to the looming trade war between the United States and China, which could potentially reduce the cost of the upcoming deal. Earlier this year, Volvo and Geely scrapped plans for a full-fledged merger, opting to merge the engine and transmission businesses instead. Currently, neither Volvo nor Geely have released the details of the upcoming deal, but it is known that the Swedish company is considering buying out its stake in some joint ventures. But once the deal is finalized, Volvo will likely become the sole owner of the Chengdu plant, the Daqing sales company and the Shanghai R&D center. There is currently no information on how much of the Swedish company will be put up for sale in the IPO, but it is known that Geely may retain a controlling stake in Volvo after the listing. According to The Wall Street Journal, Volvo's valuation could be about $ 25 billion, while the company could raise $ 3 billion. The placement could become one of the largest in Europe this year.

We believe that Volvo's unique brand, the company's focus on vehicle safety and ESG standards, and management's ambitious plans to fully switch to electric vehicles by 2030 create an attractive foundation for growing investment attractiveness in an age of environmental awareness.

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