Geely Holding Group, a Chinese automotive company, has decided to sell its Class B shares in truckmaker Volvo AB. The shares were worth $1.32 billion at the close of trading in Stockholm. This move is part of Geely’s long-term strategy and risk management plan, as it aims to diversify its investment portfolio. Despite the divestment, Geely will remain Volvo’s second-largest investor with 88.5 million A shares.
To facilitate the transaction, Geely has enlisted the services of BofA Securities, Goldman Sachs Bank Europe, and Barclays. The selling price for each share has been set at SEK285.9, representing a slight discount from the closing price.
In the meantime, Volvo has reported better-than-expected operating profit in the first quarter. The truckmaker has managed to offset declining orders by implementing higher prices. This positive performance is not surprising given the company’s efforts to reduce production and adjust to a more stable demand following the post-pandemic recovery period. As a result, Volvo’s shares have experienced a 12% increase this year.
It is worth noting that Geely has gradually reduced its stake in Volvo. In January, the company sold off a portion of its shares, and in November, it also divested from Volvo Car AB. These actions demonstrate Geely’s willingness to reshape its investment portfolio and adapt to changing market conditions.
Moreover, earlier this year, Geely had to provide financial support to Polestar, an electric-vehicle manufacturer co-founded by Geely and Volvo Car. This move highlights the challenges faced by the struggling EV industry and the steps taken by Geely to ensure stability within its ventures.
Overall, Geely’s decision to sell its Class B shares in Volvo AB aligns with its long-term strategy and risk management approach. As one of China’s leading carmakers, Geely understands the importance of diversification and adaptability in the ever-changing automotive industry. By reshaping its investment portfolio, Geely aims to secure its position as a prominent player in the global market.
