STOCKHOLM -- Volvo Cars gained in its trading debut after raising 20 billion kronor ($2.3 billion) in an initial public offering, as investors bought into the company's successful turnaround and promise of an electric future.
The shares jumped as much as 22 percent in Stockholm and traded at 63 kronor as of 12:45 p.m. local time, above the listing price of 53 kronor. The IPO valued the automaker at 158 billion kronor, according to a Volvo statement.
Volvo CEO Hakan Samuelsson said the listing symbolized a recognition of its transformation plans, in the rapidly changing car sector. "It's a very exciting journey and now we have the money for it," he told journalists and investors in a webcast opening ceremony.
The debut follows Volvo's move to cut the size of its offering by a fifth after investors balked at the prospect of the automaker's owner, Zhejiang Geely Holding Group, retaining a hold on to the bulk of the voting rights. The Chinese group eventually agreed to loosen its grip on the automaker.
Even at the reduced size, Volvo's IPO ranks among Europe’s top deals this year and is an important barometer for investors’ backing of the transition to electric vehicles. It’s also Sweden’s biggest sale since telecom operator Telia Co went public in 2000.
Volvo "took feedback from the pre-IPO process and made sure to place the deal on a level the market finds attractive," said Leif Eriksrod, head of equities at Norwegian fund Alfred Berg Kapitalforvaltning.
Still, Volvo looks slightly expensive in comparison with German peers such as BMW, Daimler and Volkswagen and with all automakers expected to "electrify in short time” the company may not be “especially far ahead," he said.
A source familiar with the listing transaction said the outcome of Volvo's IPO was good, even though investors had forced Volvo to price at the bottom of the announced range. "The company had to compromise on size and the governance structure. They were hoping for a read across on Polestar, but they were clearly not getting that," the source said.
Volvo has a 49 percent stake in the Polestar electric brand, which said in September it would go public through a $20 billion deal.
Concerns over how much control Geely will retain over Volvo, problems in the global supply chain and worries automakers could be caught in trade wars involving China curbed investor enthusiasm.
Volvo plans to sell only fully electric vehicles by the end of this decade and build a battery plant in Europe. The company wants use IPO proceeds to add carmaking capacity and almost double annual sales to 1.2 million vehicles by 2025.
Under Geely’s ownership, Volvo managed a successful turnaround after long languishing under the roof of Ford Motor.
The company has been particularly successful with its line-up of SUVs such as the XC90 and smaller XC60 that combine clean Nordic styling with a reputation for reliability and safety.
Volvo’s rejuvenation contrasts with the decline and fall of Saab, the cult Swedish brand that faltered under General Motors and eventually went bankrupt. National Electric Vehicle Sweden (NEVS), owned by the cash-strapped Chinese property group Evergrande, bought Saab's assets but is now seeking to sell them.
Reuters contributed to this report
