# Eyeing IPO, Volvo Cars to take full control of its Chinese business Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-07-21 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Volvo Cars strikes deal to buy out Geely in China joint Meta Description: Volvo Cars has struck a deal to buy out parent company Zhejiang Geely Holding from their joint ventures in China, potentially making an IPO more attractive to URL: https://financedigest.com/eyeing-ipo-volvo-cars-to-take-full-control-of-its-chinese-businesshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-07-21t113546z2lynxmpeh6k0bsrtroptp4geely-volvo-cars-1736838155138-compressed.jpg) By Niklas Pollard and Yilei Sun STOCKHOLM/BEIJING (Reuters) -Volvo Cars has struck a deal to buy out parent company Zhejiang Geely Holding from their joint ventures in China, in a move that could make a potential initial public offering (IPO) for the Swedish automaker more attractive to investors. Hangzhou-based Geely, which also owns a 9.7% stake in Daimler, said earlier this year it was considering options for Volvo, including an IPO and stock market listing. In February, Geely’s Hong Kong-listed unit [Geely Automobile and Volvo](https://www.financedigest.com/exclusive-volvo-readies-ev-blitz-in-biggest-product-revamp-under-geely.html "Exclusive: Volvo readies EV blitz in biggest product revamp under Geely") Cars scrapped plans to merge. Handelsbanken Capital Markets analyst Hampus Engellau said taking full control of the [Chinese joint ventures could help smooth the way](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES") for a Volvo Cars IPO. The clearer the ownership structure is, and the clearer the stakeholders in the company look, the easier it gets for [investors to consider what it is they are investing](https://www.financedigest.com/investment-inspection-trips-bring-liverpool-to-life-for-asian-property-investors.html "Investment Inspection Trips bring Liverpool to life for Asian property investors") in,” he said. Analysts expect other foreign automakers to strike similar deals in China, the [world’s biggest car](https://www.financedigest.com/top-luxury-car-brands-in-the-world.html "Top luxury car brands in the world") market, when the country’s requirement for auto manufacturing to be carried out with a local joint venture partner is lifted next year. Such rules for electric carmakers have already been lifted, allowing [Tesla Inc to make and sell vehicles via fully-owned operations in China](https://www.financedigest.com/us-house-committee-chair-concerned-by-tesla-deals-in-china.html "US House committee chair ‘concerned’ by Tesla deals in China"). Volkswagen has gained control of an [electric car](https://www.financedigest.com/stellantis-to-invest-130-million-euros-in-german-plant-for-new-opel-electric-car.html "Stellantis to invest 130 million euros in German plant for new Opel electric car") unit in the eastern city of Hefei. Volvo Cars’ deal, financial terms for which were not disclosed, will give it [full ownership](https://www.financedigest.com/sainsburys-pays-524-million-for-full-ownership-of-store-investment-vehicles.html "Sainsbury’s pays 4 million for full ownership of store investment vehicles") of its manufacturing plants in Chengdu and Daqing, its Chinese sales company and its research and development facility in Shanghai. Volvo [Cars sold over 166,000 vehicles in China last](https://www.financedigest.com/brand-loyal-brits-have-longer-relationships-with-their-car-than-their-last-lover.html "BRAND-LOYAL-BRITS HAVE LONGER RELATIONSHIPS WITH THEIR CAR THAN THEIR LAST LOVER") year, and its dealers are offering heavy discounts to compete with other premium brands like BMW and Audi. The Gothenburg-based company was bought by Geely from Ford in the aftermath of the [global financial crisis](https://www.financedigest.com/putin-says-west-is-triggering-a-global-economic-crisis.html "Putin says West is triggering a global economic crisis") more than a decade ago, and has since shared ownership of its Chinese plants with its parent. [Volvo Cars](https://www.financedigest.com/volvo-cars-to-axe-1300-jobs-as-it-steps-up-cost-cuts.html "Volvo Cars to axe 1,300 jobs as it steps up cost cuts") said the transactions, which are subject to regulatory approval, would be carried out in two steps, starting in 2022 and seen formally completed in 2023. These two transactions will create a clearer ownership structure within both Volvo [Cars and Geely Holding,” Geely’s CEO](https://www.financedigest.com/electric-car-maker-lucid-on-track-for-2022-2023-output-targets-ceo-says.html "Electric car maker Lucid on track for 2022, 2023 output targets, CEO says") Daniel Li said in a statement, which did not refer to the possible IPO. Volvo Cars CEO Hakan Samuelsson said in June https://www.reuters.com/business/autos-transportation/volvo-cars-ev-road-map-includes-better-batteries-longer-range-2021-06-30 the company was making progress towards a possible IPO later in 2021, and that while it would continue to share platforms and components with Geely, they would do so at “an arm’s length distance,” consistent with the way independent [companies do business](https://www.financedigest.com/keeping-an-eye-on-company-purse-strings-where-do-businesses-go-wrong.html "Keeping an eye on company purse strings – where do businesses go wrong?"). (Reporting by Niklas Pollard and Yilei SunAdditional reporting by Helena SoderpalmEditing by Anna Ringstrom and Mark Potter) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---