IPO Watch: Aston Martin Pushes Forward While Volvo Delays

By Annie Baker ● September 13, 2018

Chinese multinational auto company Geely has decided not to take Volvo Cars public in Stockholm due to a downturn in automotive stocks amid trade tension issues. In fact, the IPO plans have been delayed indefinitely. However, British automotive company Aston Martin is going to push forward with its plans to go public.

Volvo Delays IPO

“We’ve come to the conclusion that the timing is not optimal for an IPO right now,” said Volvo CEO Hakan Samuelsson via Reuters. Geely and Volvo were reportedly planning to go public at a value between $16 billion and $30 billion, according to Reuter’s sources. The companies have confirmed that a listing in the future could still happen.

Samuelsson said that going public is not favorable as of right now due to the decline in automotive shares, which also brought down the Stoxx 600 Autos & Parts index (SXAP). That index saw a 15% drop this year.

Evercore ISI analyst Arndt Ellinghorst believed that there are more conditions that were unfavorable for Volvo besides the trade wars to rationalize a value of $30 billion though. This is especially the case because Volvo is less exposed to the trade wars than its German rivals. Volvo delivered 61,480 vehicles in China in the first half of the year, which is substantially lower than BMW and Audi.

Volvo was sold to Geely by Ford Motor Company for $1.8 billion in 2010. Geely also has an equity stake in other automakers like Daimler, AB Volvo, and Lotus.

Reuter’s sources also said that Geely chairman Li Shufu believes that Volvo should increase its deliveries in China further before listing. And the company has access to alternatives for raising funds if needed.

Aston Martin IPO Pushes Forward

As mentioned earlier, luxury carmaker Aston Martin Lagonda Global Holding plc is pushing forward to go public. Aston Martin plans to go public on the London Stock Exchange within the next few weeks. Most likely the Aston Martin IPO will happen in October.

Aston Martin’s rival Ferrari — which trades on the NYSE with the symbol RACE — has seen its value more than double since it went public in 2015. Ferrari spun out of Fiat Chrysler in late 2015 due to its massive profit margins and growth plan that was laid out by late CEO Sergio Marchionne.

Aston Martin’s principal owners are Investindustrial (Italian private equity company), The Investment Dar (Kuwait-based private equity company), and Daimler AG (German automaker). A number of other private equity companies also have a stake in the company.

According to Fool.com, Aston Martin is not going to raise any money from this stock sale. The private equity groups are selling part of their stakes or all of it. The sellers include Investindustrial, Adeem Investment Company, and Primewagon. Rather than selling, Daimler is going to convert its stake to “ordinary shares” and hold it for at least a year after the IPO. It is unknown how many shares will be floated, but Aston Martin revealed it would be at least 25%.

Penny Hughes will be heading up the board of directors of Aston Martin after the IPO as a non-executive chair. And Aston Martin CEO Andy Palmer will continue to be CEO following the IPO as well.

Aston Martin’s roadmap includes a number of new models along with the reintroduction of the Lagonda brand. And the company is looking to go from 5,117 vehicle sales in 2017 to more than 9,600 in 2020.