Goldman Sach has invested US$334m in China’s Geely Automobile whose parent company is considering a bid to buy Volvo from Ford.
Agence France Presse reported that Geely Automobile said it was selling bonds and warrants to GS Capital Partners VI Fund, a private equity fund controlled by the US investment bank.
The Goldman Sachs fund would end up with a 15.1% stake in Hong Kong-listed Geely if it fully converts the bonds and warrants into stock, the privately owned Chinese carmaker said in a statement.
Under Chinese regulations, a foreign partner’s stake in an auto joint venture must not exceed 50%, AFP noted.
Geely said it plans to use the money to “fund the capital expenditures of the group, potential acquisitions and for general corporate purposes.
Two weeks ago Geely Holding Group said that it might bid for Volvo in partnership with an unspecified state-owned investment company.
John Zeng, a Shanghai-based auto analyst with IHS Global Insight, told AFP: “It’s good news for Geely that a big investment bank is upbeat on the company’s outlook.
“Geely has been accelerating the release of new products in recent years, particularly this year. Its plants in Chengdu and Shandong are starting operations. It’s under big pressure to get more working capital and raise funds.”
Zeng said the deal might not be directly related to the possible Volvo bid, as “the proceeds would not be adequate to obtain Volvo, which was valued at US$2-3bn.”