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    175   KYG3777B1032

GEELY AUTOMOBILE HOLDINGS LIMITED

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Chinese Auto Giant Geely Explores SPAC Deals

04/13/2021 | 03:40am EDT

By Jing Yang and Trefor Moss

One of China's largest car makers, Zhejiang Geely Holding Group Co., is making plans to tap into the surging market for SPACs.

The multinational company, which owns Geely Automobile Holdings Ltd., Volvo Car Group and several other electric-vehicle brands, is in talks to sponsor a special-purpose acquisition company that could raise $300 million in a Nasdaq initial public offering, according to people familiar with the matter.

In addition, the Hangzhou-based group is considering taking one of its European electric-vehicle subsidiaries public by merging it with another SPAC and boosting its valuation sharply, to as much as $40 billion, the people said.

SPACs, also known as blank-check companies, raise money by selling stock publicly and listing on exchanges before finding private businesses to merge with. They have surged in popularity and drawn record sums of money from global investors, Many startups also see mergers with SPACs as a faster and easier way to go public.

More of Asia's tycoons and investment firms have capitalized on the boom in SPACs on U.S. exchanges this year.

Geely, which is controlled by its billionaire chairman and founder Li Shufu, is considering doing the same. The group is discussing creating a SPAC with its Hong Kong-based venture arm, GLY Capital Management, according to people familiar with the matter. Under the plan being discussed, Mr. Li would sit on the new company's board with two other Geely representatives and one from Volvo, a person familiar with the talks said.

The funds raised by the new company could give Geely a war chest as it ramps up investments in new technology such as electrification and artificial intelligence. The plan is under deliberation internally and may not go ahead, people familiar with the matter said. GLY Capital, meanwhile, is raising a new venture fund that will invest in "companies that seek to redefine the transportation industry," the firm said last month. Geely and South Korea's SK Holdings are anchor investors in the fund, which is targeting a year-end close of $300 million.

Separately, Polestar, a Swedish electric-vehicle maker owned by Volvo Cars and Geely, is considering going public in the U.S. through a different SPAC in a transaction that could value the business at as much as $40 billion, the people familiar with the matter said. If achieved, it would be one of the most valuable SPAC mergers.

Polestar has been a stand-alone brand since 2017 and focuses on high-performance electric cars. The company is wrapping up a Series A fundraising round that will value it at $7 billion, the people said.

Polestar, which runs its day-to-day management and governance independent of Geely and Volvo, is aiming for a Series B fundraising that could boost its valuation to $20 billion by the end of June, before merging with a SPAC to go public, the people said.

Geely and Polestar are discussing the pros and cons of Polestar going public through a SPAC, and a final decision hasn't been made, people familiar with the matter said.

Geely has begun overhauling its strategy in recognition that it has fallen behind in the transition to electric vehicles, now widely viewed as a critical shift for all global auto makers. Its various electric brands have sold poorly in China, while Tesla Inc., BYD Co. and others have taken a commanding lead in the segment. Last month, Geely said it would set up a China-based company called Zeekr Co. to serve the premium electric-vehicle space in which Polestar and Volvo operate.

Meanwhile, the values of U.S.-listed Chinese electric-vehicle companies Li Auto Inc., Nio Inc. and XPeng Inc. have skyrocketed in recent months, giving them valuations far in excess of Geely's.

Combining with a SPAC can be a fast track to a high valuation. In February, Lucid Motors Inc., a fledgling electric-vehicle maker based in Newark, Calif., agreed to merge with a SPAC in a deal that valued Lucid at $24 billion.

Grab Holdings Inc., a Southeast Asian ride-sharing and delivery company, is in talks to go public through a SPAC that could value it as much as $40 billion, The Wall Street Journal reported.

Polestar vehicles are built in China, and the country's electric-vehicle market is among the world's biggest. An October recall of all global Polestar vehicles over faulty components that caused some vehicles to lose power, however, has dented the brand's reputation.

Despite positive reviews, the company's main production model, the Polestar 2--which was positioned as a direct competitor to Tesla's Model 3--has been a commercial flop in China.

It is now priced at the equivalent of about $41,000 before subsidies, and around 400 units have sold since August, according to the website D1EV, which tracks Chinese electric-vehicle sales. Tesla, in contrast, sold 69,280 Shanghai-built Model 3 and Model Y cars in the March quarter alone in China. The Model 3 sells for around $38,000 in the country.

The Polestar 2 has had a better reception in Europe, where it has sold more than 8,700 units since launching in July, according to the website Car Sales Base. Its sales there are still dwarfed by Tesla's Model 3 sedan, which sold more than 46,000 units in Europe during the same period. U.S. deliveries of the Polestar 2, priced locally at $59,900, began in December.

Raffaele Huang contributed to this article.

Write to Jing Yang at Jing.Yang@wsj.com and Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

04-13-21 0540ET

Stocks mentioned in the article
ChangeLast1st jan.
AB VOLVO (PUBL) -1.23% 220.4 Delayed Quote.13.73%
DJ INDUSTRIAL -1.58% 33290.08 Delayed Quote.10.51%
GEELY AUTOMOBILE HOLDINGS LIMITED 5.26% 24 End-of-day quote.-9.43%
LI AUTO INC. -2.49% 30.11 Delayed Quote.4.44%
NASDAQ COMP. -0.92% 14030.375849 Delayed Quote.8.86%
NIO INC. -0.95% 46.91 Delayed Quote.-3.75%
PROS HOLDINGS, INC. -0.26% 50.65 Delayed Quote.-0.24%
TESLA, INC. 1.09% 623.31 Delayed Quote.-11.67%
XPENG INC. 2.24% 45.23 Delayed Quote.5.60%
All news about GEELY AUTOMOBILE HOLDINGS LIMITED
06/18Hong Kong stocks post weekly loss after Fed's hawkish turn
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06/17MARKET CHATTER : Geely-owned Polestar Says Open to IPO; Shares Up 3%
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06/17MARKET CHATTER : Geely-owned Polestar to Build Electric SUV at Volvo's US Plant ..
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06/16GEELY AUTOMOBILEá : Volvo-Backed Polestar Eyes IPO
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06/15MARKET CHATTER : Geely's EV Brand Zeekr Sells All of 2021 Deliveries
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06/15Hong Kong Hang Seng Down 0.7% On Geopolitical Tensions, Tighter China Banking..
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06/15Hong Kong stocks fall as Sino-West tensions weigh
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06/15GEELY AUTOMOBILEá : EV brand Zeekr sells out of deliverable cars for this year
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06/14HYUNDAI MOTORá : GM serious about 'flying car' efforts
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More news
Financials
Sales 2021 109 B 16 903 M 16 903 M
Net income 2021 8 284 M 1 284 M 1 284 M
Net cash 2021 20 178 M 3 127 M 3 127 M
P/E ratio 2021 23,6x
Yield 2021 1,22%
Capitalization 196 B 30 360 M 30 362 M
EV / Sales 2021 1,61x
EV / Sales 2022 1,38x
Nbr of Employees 38 000
Free-Float 58,4%
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Technical analysis trends GEELY AUTOMOBILE HOLDINGS LIMITED
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Mean consensus OUTPERFORM
Number of Analysts 32
Average target price 23,30 CNY
Last Close Price 19,95 CNY
Spread / Highest target 115%
Spread / Average Target 16,8%
Spread / Lowest Target -46,5%
EPS Revisions
Managers and Directors
NameTitle
Sheng Yue Gui Chief Executive Officer & Executive Director
Wen Ze Xu President
Shu Fu Li Chairman
Cheuk Yin Lee Independent Non-Executive Director
Sau Hung Yeung Independent Non-Executive Director
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