Swedish Pride: Is Volvo About to Return to the Stock Market?
Volvo has only recently started exhuming itself from its post-recession sales hole and pushing its disastrous fling with Ford into the past. Turning a corner, the company has sold over 470,000 cars so far this year, aided largely by the successes of its XC90 SUV. Operating earnings having tripled in the first half of this year.
Now, the company has raised 5 billion Swedish crowns — $532 million — from the sale of newly-issued preference shares to a group of Swedish institutional investors.
All signs point to a confident company that wants back into the stock market.
The financial input is divided between three Swedish institutions, including two pension funds and the Folksam insurance company. While Volvo says the shares may be repurchased or converted into listed ordinary shares “upon the majority stakeholder’s decision,” it has publicly stated that no such decision has yet been made.
“Today’s move is another step towards Volvo Cars’ long expressed ambition to act as a listed company,” the company said in a statement.
Improving sales and profits at Volvo has led to rampant speculation of an inevitable stock market listing all year. While the company made a statement just last month that it had no immediate plans for an initial public offering, current events seem to indicate otherwise.
“The detailed terms of the sale have not been disclosed, but the transaction will have an immaterial dilutive effect on the current 100 per cent ownership of Volvo Cars by Zhejiang Geely Holdings,” Volvo said.
Geely purchased Volvo Cars from Ford Motor Company in 2010. The Blue Oval bought the brand in 1999, but tossed it overboard to right a recession-rocked ship. The Swedish brand recently introduced its new S90 sedan and V90 wagon, with a lineup of small vehicles on the way.
[Image: Volvo]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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With sales rising, and smaller new models coming down the pipe just as VW is reeling, this would seem as good a time as any to raise capital. Assuming Tesla hasn't ruined it for everybody, of course.
Volvo has slipped into oblivion. The Swedish auto industry barely exists.