Volvo Cars is looking to raise 25 billion kronor ($2.9 billion) in a Stockholm initial public offering in a test for automakers amid the sector's transition to electric vehicles.
The deal values Volvo Cars at as much as $23 billion -- 11 years after the Chinese firm bought the business from Ford Motor Co. for $1.8 billion. The IPO is set to be Europe’s largest since January, according to data compiled by Bloomberg.
The offering of as much as 21 percent of Volvo Cars runs through Oct. 27, and the shares are set to start trading in Stockholm on Oct. 28.
Proceeds from the share sale will help Volvo shift to a direct-to-consumer sales and subscription model, while the company this year also set an ambitious goal to go all electric by 2030. Raising additional funds will smooth the shift away from legacy combustion engines and put the company on course to chase the high valuations of other EV specialists like Nio and Tesla.
The carmaker, with an ambitious plan to only sell full EVs by 2030, plans to use the funds to add carmaking capacity so it can nearly double annual sales to more than 1.2 million vehicles. Volvo Cars also plans to construct a battery plant in Europe.
“We have a very clear strategy to be an electric company in 2030 and we’ve been on that journey for some years now,” Volvo Cars CEO Hakan Samuelsson said in an interview. “With this, of course, we can secure that transformation, because of course, it’s not free of charge.”
Geely previously attempted to take Volvo Cars public in 2018, but called off the listing after investors were said to balk at its valuation expectations of as much as $30 billion.
The IPO also comes less than a month after EV maker Polestar, controlled by Volvo and Geely, said it will go public in New York via a blank-check merger. The deal implies an enterprise value of $20 billion for the startup, with Volvo expecting to hold a 50 percent stake in Polestar after it lists.
Goldman Sachs Group and SEB are global coordinators on the IPOs, alongside bookrunners Morgan Stanley, BNP Paribas, HSBC Holdings, JPMorgan Chase & Co. and Nordea Bank. Carnegie Investment Bank and Swedbank are co-lead managers.
Volvo has previously said that owner Geely Holding will remain its biggest shareholder after the listing.
Reuters contributed to this report