Geely Says Star Board Retreat Won’t Stop Plans to Raise Cash

(Bloomberg) -- Chinese car company Zhejiang Geely Holding Group Co. is exploring other avenues for raising funds, including letting individual business units seek out capital on their own, after backing away from a listing on Shanghai's Nasdaq-style Star Board.

“We're still keeping the Star listing as one of the options, but we have more options,” Chief Executive Officer Daniel Li said in his first international media interview in the role at Geely, China's largest private carmaker and the owner of Volvo. “We encourage each individual brand, our many teams, to make their own proposals.”

“We are very confident that we have a lot of excellent assets,” Li said, who was appointed to the CEO position in November and started in the role in January.

Geely, which has more than two dozen units -- from ride-hailing services to a raft of car marques -- withdrew the Star Board listing application on Friday, citing strategic adjustments. The proposed yuan share issue saw pushback from regulators, who questioned whether Geely was high tech enough for the new bourse, Bloomberg News reported in March.

Geely's Hong Kong-traded stock dipped as much as 6.7% on Wednesday before recovering to be down about 3.4%.

Speaking Tuesday from Geely's headquarters in Hangzhou, eastern China, Li said potential investors have approached Geely about its new electric-vehicle arm, Zeekr Intelligent Technology Holding Ltd., and that the company was open to opportunities that would allow it to help finance development of the business. The company's EV battery-swapping division, EE Internet Technology Co., is set to raise funds from a couple of investors later this year.

Li, 51, who was previously Geely's chief financial officer, also said he expects Volvo's planned listing on the Nasdaq Stockholm stock exchange to “move quite fast” and lure a “very good valuation,” given it's the only automotive joint venture in China that allows the foreign partner to control decision-making on the ground. The iconic Swedish carmaker, which Geely took control of in 2010, could raise around $20 billion, people familiar with the matter told Bloomberg in March.

Geely will also allow Volvo to immediately take majority control of the ventures between Geely and Volvo in China, as long as policy permits, Li said, without elaborating. China is on track to remove the current cap of 50% on foreign carmakers' stakes in joint ventures that make gasoline-powered cars in 2022.

Like other carmakers globally, Geely is grappling with how to respond to the once-in-a-generation shift in the auto industry wrought by electrification and autonomous driving.

After spending the past decade investing in legacy carmakers, Geely, which controls Lotus and is the biggest investor in Daimler AG, is now focusing on new-energy cars, with a target to have 20% of its sales electric by 2025 on track, Li said Tuesday. Zeekr is key to that pivot, but it's entering a competitive market, with giants like Volkswagen AG unveiling EV lineups in China this year, and electric pioneers like Tesla Inc. and local upstart Nio Inc. already winning over consumers. Tech titans like Apple Inc. and China's Xiaomi Corp. are also eyeing car ventures.

Open to Apple

Geely hasn't been approached by Apple, which is seeking to develop its own self-driving car, but Li said he would be interested in working with the U.S. company, Li said.

“We are open to partnerships with all strategic industrial and internet leaders,” he said.

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Founded in 1986 by Chinese billionaire Li Shufu, Geely already partners with search-engine giant Baidu on autonomous-vehicle technology, and has two flying car units, including Bruchsal, Germany-based Volocopter, which it invests in with Daimler.

The chip shortage that has hit global car production this year has also affected Geely, with sales down by as much as 15% for its different brands, according to Li. The company is aiming to start first deliveries of Zeekr's 001 EV, which it spent four years developing, in October.

Li expects the group to meet its sales target for 2021 of 2.2 million units, despite challenges to the supply chain and economy because of the pandemic. Sales for Volvo -- which is being turned into a full electric automaker -- were even better in the first five months of this year than in the same period of 2019, he said.

“I'm personally confident in the direction of the Chinese economy,” Li said. “In the automotive industry, also, we can see the continuous consumption of new energy cars.”

With assistance from Bloomberg