Is Chinese Giant Automaker Geely Joining Hip Rivals Nio, Xpeng, Li With US Listing?

Geely Automobile Holdings Ltd’s GELYF parent Zhejiang Geely Holding Group Co and among China’s largest automakers that owns multiple brands, is in talks to sponsor two blank-check acquisition deals, reports the Wall Street Journal.

What Happened: The multinational company that also owns Volvo Car Group is in talks to sponsor a $300 million special purpose acquisition company for a Nasdaq listing and another SPAC to list the Swedish-electric vehicle maker Polestar, the report said — citing people familiar with the matter.

The Hangzhou-based group plans to list Polestar, owned by Volvo Cars and Geely, through a different SPAC in a transaction that could value the business at as much as $40 billion and would be one of the most valuable SPAC mergers.  

Polestar focuses on high-performance electric cars and is currently wrapping up a Series A fundraising round that will value the startup at $7 billion and it's 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 report said.

The group, which also owns many electric vehicle brands, is discussing creating a SPAC with its Hong Kong-based venture arm, GLY Capital Management. 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. 

Bloomberg News reported last month that Geely is weighing reviving IPO plans for its Volvo Cars unit that could value the business at around $20 billion.

Why It Matters: Geely is playing catch-up even as rivals such as Tesla Inc TSLA, BYD Co BYDDF, and others have established themselves while its electric brands have sold poorly in China. 

The values of the U.S.-listed Chinese electric-vehicle companies Li Auto Inc LI, Nio Inc NIO, and XPeng Inc XPEV have burgeoned in recent months and positioning them with valuations far in excess of Geely’s.  

Price Action: Shares of Geely closed 4.03% higher at $2.58 on Tuesday, those of Xpeng 4.38% higher at $35.47, Nio 3.6% higher at $38.48, and Li Auto closed 0.18% higher at $21.82.

Photo by RL GNZLZ on Flickr