Volvo sister brand Geely moves toward Shanghai listing

Europe

BEIJING/SHANGHAI — Geely Automobile Holdings said on Wednesday its board had approved a preliminary proposal for the possible issue of renminbi shares and a listing on mainland China’s Nasdaq-like STAR board.

The Zhejiang-based automaker, whose parent is Zhejiang Geely Holding Group, is currently listed on the Hong Kong Stock Exchange with a market capitalization of 116.77 billion Hong Kong dollars ($15.07 billion).

Geely Automobile and sister brand Volvo Cars, which Zhejiang Geely Holding bought from Ford Motor in 2010, are planning to merge and list in Hong Kong and possibly Stockholm.

Apart from Volvo, Zhejiang Geely Holding also holds a 9.7 percent stake in Mercedes-Benz parent Daimler.

Geely Automobile said in a filing that the new renminbi shares on the Shanghai Stock Exchange would not involve conversion of existing shares. The board will hold further talks on the size of the issue.

The money raised will be used for “business development and general working capital of the group,” it said, without elaborating.

“We believe such proceeds are likely to be used for the Volvo merger, although Geely cannot explicitly state it before the merger approval by disinterested shareholders,” said Shi Ji, an analyst at Haitong International.

“It is a good way for the company to raise funds as valuations in the A-share market are usually higher than the H-share market,” Shi added, comparing mainland and Hong Kong markets.

Geely Automobile plans to roll out six new models under the Geely, Lynk & CO and Geometry marques this year. It sold 1.36 million cars in 2019 and is targeting sales of about 1.4 million units this year.

It reported a profit of 8.19 billion yuan ($1.16 billion) last year.

Last month, Geely Automobile raised 6.48 billion Hong Kong dollars from a share placement.

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