Volvo is gearing itself for a $20 billion IPO | Volvo IPO

By the end of the month, an agreement could be done | Volvo IPO

Right now, things are looking up for Volvo. Despite the hurdles posed by the global pandemic, Volvo achieved new sales records in 2020.

Volvo appears to be immune to the semiconductor chip scarcity, as sales in the United States have climbed for 15 months in a row.

Volvo is set to unveil its first dedicated electric car, the C40 Recharge, following the XC40 Recharge, as part of its plan to go all-electric by 2030.Volvo IPO

Volvo XC40 | Volvo IPO

Volvo’s parent company, Geely, is reportedly planning a $20 billion initial public offering to raise the capital needed to transition to electric vehicles.

Reuters reports that Geely is in “advanced talks” to launch Volvo‘s initial public offering (Volvo IPO) at the end of September. If approved, it will be one of Europe’s largest initial public offerings this year.

Geely is seeking a valuation of $20-30 billion, according to Reuters, but a source says $16 billion is a more realistic figure.

Volvo IPO would be valued at $20 billion if it were valued at six to seven times earnings, similar to Daimler and BMW. Tesla, on the other hand, is valued at more than 70 times its earnings.

Volvo’s luck may be set to run out, despite a bright start to 2021. Due to supply problems, the Swedish manufacturer expects sales to fall in the second half of the year.

Volvo XC40 | Volvo IPO

“The excellent margins witnessed in the first half of 2021 are unlikely to be sustainable, as the market benefited from a strong post-pandemic bounce that is unlikely to persist,” said Frank Schwope, a NordLB automotive analyst who predicts a valuation of $10 billion to $15 billion.

This isn’t the first time Geely has attempted to go public with Volvo. The previous effort was in 2018, with a valuation of $16-$30 billion, but the deal fell through owing to trade concerns and the decline in the value of automotive stocks.

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