Geely will raise around $350m from the sale
Geely says it will continue to support Volvo
Geely is dropping its stake in Volvo to help raise some cash. The company has offered around 100 million of its shares in Volvo to help raise that money and improve the free float of shares for investors.
Zhejiang Geely Holding Group, the company’s full name, is a privately held company run by Chinese billionaire Li Shufu. It entered the auto industry in 1997 and last year the group sold more than 2.2 million cars. Geely’s car brands include Geely, Lotus, Smart, Volvo, and more.
Geely bought Volvo from Ford in 2010, taking on 82 percent ownership. This sale of 100 million shares brings its ownership stake down only slightly, to 78.7 percent (via Auto News Europe).
“The placing will increase the free float and further broaden the shareholder base of Volvo Cars. Proceeds received by Geely Holding are intended to be used to support business development within the group,” the company said.
While none of the funds from the sale went directly into Volvo, Geely said that it would still continue to support the Swedish automaker.
Though the cash went into Geely to support its operations, both Volvo and Geely describe the sale as a benefit for investors. “This increase in our public float and improvement in trading liquidity benefits both new and existing investors,” Volvo CEO Jim Rowan said in a statement. ANE cites investor concern over the small number of shares publically traded for causing volatility in the company’s share price.
