Breakingviews - Volvo Cars IPO is priced to go
the amount it wants to raise in a jumbo-sized equity offering by a fifth to 20 billion Swedish crowns . It also priced the IPO at 53 crowns a share – right at the bottom end of its initial range. That values the company’s equity at around 163 billion crowns, or almost $19 billion, compared with over $23 billion at the top of the range. Geely has also said it would convert its super-voting shares to normal ones.
It’s easy to see why investors needed some convincing . Volvo is still at its early stages of its transition to electric vehicles from combustion engines, and governance is a concern since Geely will still be the largest shareholder. The good news is that, after Monday’s announcement, Volvo’s valuation implies a multiple of just 4.5 times 2022 estimated earnings, including its stake in the luxury battery marque Polestar.
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