Volvo to List on European Stock Exchange This Month... Targeting Minimum Corporate Value of 23 Trillion Won

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Volvo Cars will be listed on the European stock market at the end of this month. Volvo aims to be valued at a market capitalization of $20 billion (approximately 23 trillion KRW) through its initial public offering (IPO). Although Volvo is attracting significant attention by announcing its transformation into an electric vehicle company, some argue that the $20 billion target is unrealistic when compared to companies like Daimler and BMW.

According to CNBC on the 15th (local time), Geely Automobile, the largest shareholder of Volvo Cars, is reportedly conducting preliminary consultations with investment banks ahead of Volvo's IPO. The lead underwriters are Goldman Sachs and SEB, with BNP Paribas, Carnegie, HSBC, and others also participating. Geely aims to list Volvo on the Stockholm Stock Exchange by the end of September and achieve a market valuation of at least $20 billion.

However, some believe that the $20 billion market valuation target set by Geely Automobile for Volvo is unrealistic. This valuation is about 6 to 7 times Volvo's sales, which is comparable to the corporate values of Daimler, the parent company of Mercedes-Benz, and BMW.

Frank Schwope, an analyst at the German investment bank NordLB, stated, "Volvo's market value is estimated to be between $10 billion and $15 billion," adding, "Although Volvo's performance in the first half of this year was quite good, it is a base effect following the COVID-19 pandemic and is unlikely to be sustainable."

Volvo is garnering attention by announcing its transformation into an electric vehicle company. Volvo has declared that it will produce only 100% electric vehicles by 2030.

Previously, Geely Automobile also attempted to take Volvo public in 2018, but the plan was indefinitely postponed due to the US-China trade dispute and undervaluation of automakers' stocks.

Meanwhile, Chinese Geely Automobile acquired Volvo, a leading Swedish automaker, in 2010 by investing a total of $1.8 billion. Since the acquisition, Geely founder Li Shufu has maintained Volvo Cars' independent management.