Three Swedish pension funds – AMF, Folksam and AP1 – have agreed to buy SEK5bn (€514m) of newly issued preference shares in Chinese-owned but traditionally Swedish carmaker Volvo Cars, hoping the issue marks a step on Volvo’s path back to stock market listing.
AMF has signed up to buy SEK2.5bn of the new shares – which include the right to have them converted into new ordinary shares in a possible future initial public offering (IPO) – AP1 has agreed to buy SEK1.5bn, and Folksam is to buy SEK1bn of the investments.
Anders Oscarsson, equity manager and head of ownership at the SEK550bn pensions provider AMF, said: “We are very excited about this opportunity to be on what will hopefully become Volvo Cars’ journey back to a position as a listed company in the future.”
He said the pension fund had recently looked carefully at the company’s development, met with management and examined the firm’s figures and research, as well as its new model programme.
“The picture that emerges is impressive,” he said. “Volvo Cars is now a well-run and profitable company with a robust growth strategy and promising prospects.”
Volvo Cars has been 100% owned by Chinese private company Geely since it bought the company from Ford Motors in 2010.
Some 17,800 of Volvo Cars’ 28,500 staff are based in Sweden, and production focused on premium cars is located in Sweden, Belgium and China.
Volvo Cars, whose headquarters is in Gothenburg, Sweden, has been separate from the Volvo Group since 1999.
Olof Jonasson, head of equities at AP1, Sweden’s first national pensions buffer fund, said Volvo cars now had modern platforms that were adjusted to produce electric as well as self-driving cars.
“As well as this, it has launched a number of exciting partnerships and invested in a more geographically balanced production,” he said. “We believe the future development of Volvo Cars can contribute positively to returns on pensions capital.”
Meanwhile, at Folksam, Michael Kjeller, head of the pensions and insurance group’s asset management, said the investment would give customers a good risk-adjusted return, as well as the chance to be owners of a company with a strong link to Swedish industry.
“Volvo Cars has a strong profile as far as safety is concerned, and not least from a sustainability perspective,” he said.
Folksam said the investment in Volvo Cars preference shares would be divided between its subsidiaries, with SEK450m going to the life and pensions business Folksam Liv, SEK100m to Folksam Sak, the non-life insurance business, and SEK400m going to KPA, its local government pension scheme unit.